Interactive Simulations
This little browser based interactive simulation visualizes the welfare implications of different approaches to connect buyers and sellers of a good. The user can act as a perfectly informed social planner, as a partially informed social planner, or she can elicit bids / ask-offers from simulated agents in a double auction setting (Gode and Sunder, 1993). The resulting allocations with the implied consumer and producer surpluses are visualized. The user experiences the informational demands that a social planner faces, and she observes the ability of a price system to allocate scarce resources when information is largely private (Hayek, 1945), even if individual market participants are not sophisticated (Becker, 1962).
The simulation is complementary to standard partial equilibrium analysis. Basic concepts -- such as supply / demand curves and consumer / producer surplus -- are visualized. Each transaction occurs between a specific buyer and a specific seller, it is concrete and visible. The website provides a detailed documentation in pdf format, a step-by-step tutorial, and suggestions on how to explore this simulation and integrate it into courses at different levels.
References:
Becker, G. S. (1962) “Irrational Behavior and Economic Theory” Journal of Political Economy, 70 (1):1-13.
Gode, D. K. & S. Sunder (1993) “Allocative Efficiency of Markets with Zero-Intelligence Traders: Markets as a Partial Substitute for Individual Rationality” Journal of Political Economy, 101(1):119-137.
Hayek, F.A.(1945) “ The Use of Knowledge in Society” American Economic Review, 35 (4):519-530.
Smith, V. L. (1962) “An Experimental Study of Competitive Market Behavior” Journal of Political Economy, 70 (2):111-137.
Trade in a two good endowment economy
The user can choose the endowment of agents with two goods. Then agents trade in a double auction setting. Agents use random trading strategies that are only constraint to ensure that a trade cannot make an agent worse off. It can be seen how the agents’ marginal rates of substitution gradually equalize. Eventually a pareto optimal allocation is reached.
A living circular flow economy
A dynamic and interactive online simulation visualizes an entire economy, from the behavior of individual agents and their interactions, to the resulting macroeconomic outcomes. The outcomes of the simulated interactions are displayed in a (dynamic) circular flow diagram and as time series data. The user can affect economic activity and observe the resulting changes.
An interactive simulation of the spread of an infection and counteracting isolation measures. The simulation runs in a browser. Ideally on a larger screen. The user can adjust several simulation parameters (e.g. infection and mortality rates) and can implement isolation policies to suppress the spread of the infection (e.g. tracing).
The goal of this simulation is to illustrate mechanisms, not to obtain quantitative results. This is not an epidemiological model. The parameters are not calibrated.