MIT's simulations often bait students into 'price wars.'

Anyone with a web connection can engage in the marketplace maneuvering, the pressure-packed decision making, and the inevitable price wars that break out among business students at the Massachusetts Institute of Technology (MIT).

For four years, students in John Sterman’s business management courses have gone toe to toe in simulated business arenas, with the latest being a concocted world of video game companies looking for an edge in marketing and selling their game consoles and software.

The university announced Nov. 30 that the simulation, known as “Platform Wars,” would be freely available on the MIT Sloan Teaching Innovation Resources (MSTIR) website, following the lead of MIT’s OpenCoursWare program, a seminal experiment in higher education’s sharing of open source material.

Sterman, a professor in MIT’s Sloan School of Management, said the chance to employ out-of-the-box strategies in simulated business environments has proven perhaps more valuable to his students than strategizing in the real world.

“In many respects, simulation is superior to the real world when it comes to theory and learning,” said Sterman, director of MIT’s System Dynamics Group, a gathering of researchers. “[A simulation] is a safe container. Students choose strategies that may not work just to learn about it, and your actual bank account isn’t drained if you lose millions in the simulation. … Like a flight simulation, you risk nothing.”

In “Platform Wars,” students set the price of hardware, negotiate royalty rates with game makers, and decide if they should subsidize the first few games for their video game system, because, as Sterman said, “if there are no games to run on it, it’s just a big, heavy paperweight.”

“Platform Wars” often lures MIT students into price wars with their competitors. Companies in the online simulation see their prices undercut by the competition, and respond in kind.


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