Abstract:

“Simple things should be simple, complex things should be possible.” (Alan Kay)
The Lehman default has shown that things might seem simple at first glance. However, if details are taken into account, the matters may turn complicated to the extent where they are impossible to handle. The default triggered a worldwide economic crisis and huge political discussion about the responsibility of the financial industry for the worldwide welfare. Bankers became labeled as gamblers. Hedgefonds, banks and stock exchanges were called casinos that move assets around the world. We do not want to comment or fuel this political discussion, but we see a strong wish to change specific parts of the financial system.

Lots of empirical research has been done to explain the crisis and its origins. Major parts of this empirical knowledge have been integrated very quickly in the academic curriculum so as to enable students to understand the causes of the crisis. Lectures – a typical representative of behaviouristic learning – and seminars - a manifestation of cognitivistical learning – are a crucial part of the academic teaching process, but this may be insufficient for students facing the post-university requirements of the financial industry. Operating on financial markets is a highly active and social process. We therefore argue that teaching should be supplemented by practical courses, where the interaction between students and teachers is very dynamic. Learning to behave responsibly and correctly on financial markets can be supported by a constructivistic learning approach, which is implemented in our case as an active interaction on a simulated financial market.

The idea of simulating financial markets is not new. There are many financial market simulation software packages or tools primarily designed to support research activities to test new software, or to train employees , e.g. CapSyn, SFI Artificial Stock Market, Xetra Simulation, RTS Tango, etc. On the other hand, there are packages, such as TraderEx, that were developed mainly for educational purposes. Their number is, however, comparatively small.

Furthermore, the existing simulation software exhibits multiple drawbacks that impede the learning process significantly:
• Complex and overloaded user interfaces. From our experience, it takes significant time for students to familiarize themselves with the simulation software. According to the theory of gentle slope of complexity, however, a user interface must fit students’ abilities and skills during their specific learning process.
• Lacking responsiveness of the learning environment. Certain solutions get less responsive as the scenario complexity and the number of interactions grows. However, as postulated in the media synchronicity theory, the more complex a scenario gets, the more responsive the interaction support has to be.
• Sandboxing of the market participants. During the simulation session, students should receive sufficient training so as to be able to face real challenges on real financial markets. This is not the case due to limitations in the existing software packages. We think that advanced tasks require technologies that fit the specificity of the learning setting.

In this paper, we present a software artefact designed considering the above-mentioned requirements. The software has been evaluated by the requirements of ISO 9241/110 and, as indicated in our case studies, has facilitated and enriched the learning process.

Keywords:

Trading, Financial Markets, Simulation, Constructivism.