On Compensatory Demand Functions in Marketing Simulations

Abstract

Given the usual pedagogical environment in which simulations are used, the potential for teaching the wrong things through their use is very great, especially since it appears that most marketing simulations can be coaxed into anomalous behavior. It is argued in this paper that a major reason for this potentially anomalus behavior is the use of a compensatory demand function which, while possessing a desired level of algorithmic simplicity, does not adequately portray marketplace behavior. A general approach to a solution to this problem is suggested.