An algorithm for incorporating company reputation into business simulations: Variations on the Gold standard

Abstract

Gold recently presented a system-dynamic-based approach to the design of business simulations. In it, he argued that the focus of simulation design efforts have mostly been carried out at the subsystem level, developing independent algorithms that follow inconsistent logic. As a result, they do not lend themselves to integration into a single, dynamically interactive model. To address this, he drew on the economic theory of the firm to develop and test a system of interacting algorithms that gives equal emphasis to both demand and supply factors. Most important, Gold’s approach provides a common, theoretically anchored platform for integrating potentially conflicting functional algorithms. This article tests the robustness of this approach by using Gold’s model as a vehicle for capturing the effects of company reputation, a phenomenon that has emerged from a totally different (management and marketing) research tradition.