Teaching Dynamic Processes in Finance: How Can We Prepare Students for an Age of Rapid and Continual Chance?
Preparing students to function in a business environment characterized by rapid and continual change requires the nurturing of proactive and critical thinking skills, and a deeper understanding of the relationships between key business variables. Bringing this perspective into the classroom means allowing students to experience the evolution of a given system as time progresses and inputs affecting the system change. We contend that these objectives can be achieved best by involving students in hands-on and interactive exercises that can potentially accelerate the development of mature business skills and intuition. In this paper we explore system dynamics modeling, and present two examples to demonstrate its power and appropriateness as a pedagogical tool that facilitates the teaching of dynamic processes in finance.