Thinking in Agent-based Economics

Thinking in Agent-based Economics∗

Xihao Li †
Department of Economics and Social Scien...
Thinking in Agent-based Economics

Introduction

Agent-based Economic Thinking

Next?

Introduction: I
Agent-based Economi...
Thinking in Agent-based Economics

Introduction

Agent-based Economic Thinking

Introduction: II
Agent-based economic rese...
Thinking in Agent-based Economics

Introduction

Agent-based Economic Thinking

Thinking in Agent-based Economics
Agent-ba...
Thinking in Agent-based Economics

Introduction

Agent-based Economic Thinking

Next?

Static View: Economic System
AE con...
Thinking in Agent-based Economics

Introduction

Agent-based Economic Thinking

Next?

Static View: Economic Agents
AE cla...
Thinking in Agent-based Economics

Introduction

Agent-based Economic Thinking

Static View: Active economic agent
AE admi...
Thinking in Agent-based Economics

Introduction

Agent-based Economic Thinking

Static View: Passive economic agent
AE adm...
Thinking in Agent-based Economics

Introduction

Agent-based Economic Thinking

Next?

Dynamic View: Economic System

Dyna...
Thinking in Agent-based Economics

Introduction

Agent-based Economic Thinking

Dynamic View: Active Economic Agent
Active...
Thinking in Agent-based Economics

Introduction

Agent-based Economic Thinking

Next?

Thinking in Agent-based Economics: ...
Thinking in Agent-based Economics

Introduction

Agent-based Economic Thinking

Next?

What’s after agent-based model?

Co...
References

References I
Li, X. (2013). Standardization of agent-based modeling in
economics. Working Paper. http://mpra.u...
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Thinking in Agent-based Economics

  1. 1. Thinking in Agent-based Economics Thinking in Agent-based Economics∗ Xihao Li † Department of Economics and Social Sciences (DiSES) ` Universita Politecnica delle Marche October, 2013 ∗ This notes is based on (Li, 2013). Comments are welcome! Please feel free to contact me. † ` Department of Economics and Social Sciences (DiSES), Universita Politecnica delle Marche, Piazzale Martelli 8, 60121 Ancona, Italy. Email: xihao.li@gmail.com. The author would like to thank Cathy Du, Gaia Li, and Sofia Li for invaluable support. Xihao Li Notes
  2. 2. Thinking in Agent-based Economics Introduction Agent-based Economic Thinking Next? Introduction: I Agent-based Economics (AE) is: a study of economic system from ’bottom-up’: macrolevel economy result from micro-level interaction of a collection of heterogenous economic agents, see (Tesfatsion and Judd, 2006). ⇒ to understand the macro-level economic phenomena, one has to look from ’bottom-up’, to find out: Who : who (economic agent) acts behind the scene of macro-level economy? How : How economic agents interact? What: What is the outcome of economic agents’ interaction? This outcome links to what economic phenomenon? Xihao Li Notes
  3. 3. Thinking in Agent-based Economics Introduction Agent-based Economic Thinking Introduction: II Agent-based economic research is an interdisciplinary research, with intimate interaction between economists and computer scientists (software engineer, computer programmers). Computer Programmers: Computer Programming Language Economists: Agent-Based Modeling Language Economic System Computer Software System Agent-Based Model Xihao Li Notes Next?
  4. 4. Thinking in Agent-based Economics Introduction Agent-based Economic Thinking Thinking in Agent-based Economics Agent-based Economics (AE) considers two aspects: 1 static view; 2 dynamic view. Agent-based Economics (AE) focuses on: 1 economic system; 2 economic agent. Xihao Li Notes Next?
  5. 5. Thinking in Agent-based Economics Introduction Agent-based Economic Thinking Next? Static View: Economic System AE considers economic system from Constructive Perspectives of Economic System (CPES): 1 Scope of the economic system: its boundary and its environment; 2 Interrelation between the economic system and its environment; 3 Elements of the economic system: economic agents considered in the economic system; 4 Structure of the economic system: interrelation among elements of the economic system. Xihao Li Notes
  6. 6. Thinking in Agent-based Economics Introduction Agent-based Economic Thinking Next? Static View: Economic Agents AE classifies two types of economic agents: Active economic agents: directly involved with the functionality of human subject, with autonomous and active behavior to fulfill objectives; e.g., households, firms. Passive economic agents: not directly involved with the functionality of human subject; e.g., commodities traded in the market. Xihao Li Notes
  7. 7. Thinking in Agent-based Economics Introduction Agent-based Economic Thinking Static View: Active economic agent AE admits the general structure of active economic agent, called Modules (elements) of Active Economic Agent (MAEA): Information flows Module of Active Economic Agent Submodule of Information storage Submodule of information acquirement Submodule of objectives Submodule of learning Environment Submodule of forecasting Submodule of action transmission Information flows Xihao Li Notes Next?
  8. 8. Thinking in Agent-based Economics Introduction Agent-based Economic Thinking Static View: Passive economic agent AE admits the general structure of passive economic agent, called Modules (elements) of Passive Economic Agent (MPEA), i.e., information container with a set of economic properties. For example, Xihao Li Notes Next?
  9. 9. Thinking in Agent-based Economics Introduction Agent-based Economic Thinking Next? Dynamic View: Economic System Dynamics of economic system results from active economic agents actively take action to fulfill their objectives. ⇒ Specification of active economic agent dynamics is sufficient for dynamics of economic system. Xihao Li Notes
  10. 10. Thinking in Agent-based Economics Introduction Agent-based Economic Thinking Dynamic View: Active Economic Agent Active economic agent dynamics has routine, called general decision-making process: Xihao Li Notes Next?
  11. 11. Thinking in Agent-based Economics Introduction Agent-based Economic Thinking Next? Thinking in Agent-based Economics: Modeling Procedure To develop Agent-based Model for economic research, AE takes the following modeling procedure: Static initialization: Initialize economic agents involved: specify each submodule in MAEA for active economic agents, and specify each economic property in MPEA for passive economic agents; Dynamic specification: Specify dynamics of active economic agents with the routine of general decision-making process. Xihao Li Notes
  12. 12. Thinking in Agent-based Economics Introduction Agent-based Economic Thinking Next? What’s after agent-based model? Computer programming to build the computer simulation for agent-based model; Analyzing simulation results. Simulation results normally has detailed micro-level data (time series) for each economic agent as well as macro-level data (time series) for economic system. Analyzing simulation results is to apply econometric and statistical technique to discover and to analyze the linkage between microlevel data and macro-level data. Xihao Li Notes
  13. 13. References References I Li, X. (2013). Standardization of agent-based modeling in economics. Working Paper. http://mpra.ub.unimuenchen.de/47396/1/MPRA paper 47396.pdf. Tesfatsion, L. S. and Judd, K. L. (2006). Handbook of Computational Economics, Vol. 2: Agent-Based Computational Economics. Handbooks in Economics Series. North-Holland. Xihao Li Notes
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