By Lynne Hamill, Nigel Gilbert
Agent-based modelling in economics
Lynne Hamill and Nigel Gilbert, Centre for study in Social Simulation (CRESS), college of Surrey, UK
New tools of financial modelling were sought end result of the worldwide financial downturn in 2008.This detailed e-book highlights the advantages 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 organizations to optimise or fiscal platforms to arrive equilibrium. ABM deals the way to hyperlink micro foundations on to the macro situation.
- Introduces the concept that of agent-based modelling and exhibits the way it differs from current approaches.
- Provides a theoretical and methodological intent for utilizing ABM in economics, besides useful recommendation on tips to layout and create the models.
- Each bankruptcy begins with a brief precis of the correct monetary concept after which exhibits how one can practice ABM.
- Explores either themes coated in simple economics textbooks and present very important coverage subject matters; unemployment, trade premiums, banking and environmental issues.
- Describes the versions in pseudocode, allowing the reader to advance courses of their selected language.
- Supported via 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 learn agent-based types. 3rd yr undergraduate, grasp and doctoral scholars, college economists will locate this e-book a useful resource.
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Extra resources for Agent-based modelling in economics
Giving preferences to households In economic theory, preferences are modelled by utility functions. A Cobb–Douglas utility function has been chosen because it offers a very simple analysis that may already be familiar. The Cobb–Douglas utility function for two goods is U A B1 where U is utility, A and B are the quantities of goods A and B, respectively, and alpha (α) must lie between zero and one. Each agent’s tastes are controlled by alpha: the higher alpha, the stronger the preference for good A.
In the United Kingdom, the Office for National Statistics (ONS) undertakes an annual survey of households’ spending (ONS, 2011). The information collected is very detailed as it is used to set the appropriate weights for the retail and consumer price indices. In the United States, the Bureau of Labor Statistics conducts the similar Consumer Expenditure Survey. 1 shows what the UK 2010 Family Spending survey found in broad terms: housing, food and fuel accounted for 40% of the average household’s budget.
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. Distributing budgets Economic theory refers to budgets, but defining budgets operationally is not straightforward. A household’s budget is clearly related to its income.
Agent-based modelling in economics by Lynne Hamill, Nigel Gilbert