By Lynne Hamill, Nigel Gilbert
Agent-based modelling in economics
Lynne Hamill and Nigel Gilbert, Centre for learn in Social Simulation (CRESS), college of Surrey, UK
New tools of monetary modelling were sought a result of worldwide monetary downturn in 2008.This specified e-book highlights some great benefits of an agent-based modelling (ABM) procedure. It demonstrates how ABM can simply deal with complexity: heterogeneous humans, families and companies interacting dynamically. in contrast to conventional tools, ABM doesn't require humans or companies to optimise or fiscal platforms to arrive equilibrium. ABM bargains how to hyperlink micro foundations on to the macro situation.
- Introduces the idea that of agent-based modelling and indicates the way it differs from latest approaches.
- Provides a theoretical and methodological motive for utilizing ABM in economics, in addition to sensible suggestion on the right way to layout and create the models.
- Each bankruptcy starts off with a quick precis of the appropriate financial concept after which indicates easy methods to follow ABM.
- Explores either subject matters lined in easy economics textbooks and present vital coverage topics; unemployment, alternate charges, banking and environmental issues.
- Describes the versions in pseudocode, permitting the reader to advance courses of their selected language.
- Supported by way of an internet site that includes the NetLogo versions defined within the book.
Agent-based Modelling in Economics provides scholars and researchers with the abilities to layout, enforce, and examine agent-based types. 3rd 12 months undergraduate, grasp and doctoral scholars, college economists will locate this booklet a useful resource.
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Additional resources for Agent-based modelling in economics
The simplicity of the Cobb–Douglas utility function has a basic disadvantage, namely, that the share of an agent’s budget that is spent on a particular class of goods is fixed whatever happens to prices. If price changes are small, a fixed budget share may be a reasonable assumption, and much economic analysis is based on marginal decisions. 5 Relationship between expenditure and price elasticities. 7 Results: change in utility by budget following a 10% increase in the price of food (based on a single run with 1000 agents).
2. 2 Effect of a change in price on demand. 100 32 Agent-Based Modelling in Economics of the utility function assumed, the demand for B is not affected by price changes in this example because total expenditure on A does not change, remaining at £50. ) To create an agent‐based model using this theory, agents representing households are each allocated a budget and a utility function. To draw demand curves, each household is asked how much of the good in question it would buy at that price. First, we show how to model budgets, and then we add a utility function and generate demand curves.
The model using heterogeneous agents suggested a few households would actually stop consuming altogether and total expenditure would fall by 8%, less than the 12% suggested by the representative agent model. However, these figures were derived using price elasticities that were assumed because no estimates are available. If we are to move away from using representative agents, we need estimates of price elasticities for different income groups and not just at the mean. e. the relationship between income and consumption) must be linear.