Charlotte Bruun's Advances in Artificial Economics: The Economy as a Complex PDF

By Charlotte Bruun

ISBN-10: 3540372474

ISBN-13: 9783540372479

This e-book relies on displays at AE’2006 (Aalborg, Denmark) – the second one symposium on synthetic Economics. As a brand new confident simulation approach, Agent-Based Computational Economics (ACE) has in recent times confirmed its power and applicability. assurance during this quantity extends to popular questions of economics, just like the lifestyles of industry potency, and to questions raised via new analytical instruments, for instance networks of social interaction.

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Additional resources for Advances in Artificial Economics: The Economy as a Complex Dynamic System (Lecture Notes in Economics and Mathematical Systems)

Sample text

3 specify how agents make decisions and take actions. 1 The Environment We consider an economy with n traders. There is cash and one good, which is an asset with a (random) realization value Y at a given time T in the far future. Each trader i has an initial endowment of cash ci ≥ 0 and shares si ≥ 0. We rule out any informational effect and assume that all traders believe that Y is normally distributed with mean μ ≥ 0 and precision τ = 1/σ 2 > 0 and that no new information is ever released. Therefore, traders’ beliefs about Y are homogeneous and never change until uncertainty resolves.

In our model, we consider one more decision: Which strategy should they choose to obtain higher profit? Each agent chooses a strategy from a set of three alternatives (GD, K and ZIP). To take this decision each trader only knows their own reservation prices and the information generated in the market, but he doesn’t know the bidding strategy of the other agents or the profit achieved by them. Each agent learns to change his strategy looking for the best bidding strategy in the following way: An agent will consider to change his strategy if the profit is less than the profit from the previous period.

Prescriptively, this suggests that a market regulator attempting to reduce excess volume in an exchange market would be well advised to opt for a batch auction or a dealership. Moreover, he should make an effort to educate traders towards making use of the signals embedded in the market price. Time to convergence. The ranking with respect to time to convergence is D > H >> C > B, where > stands for “lower time” and >> for “much lower time”. Protocols involving a dealer converge much faster. Intelligent trading is overall beneficial but has an ambiguous effect.

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Advances in Artificial Economics: The Economy as a Complex Dynamic System (Lecture Notes in Economics and Mathematical Systems) by Charlotte Bruun


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