Beyond Experimental Economics: Trading Institutions and Multiagent Systems

Abstract

The ancillary hypothesis of unbounded rationality has dominated economic modelling for several decades. This extreme assumption has been relaxed in a fast growing literature under different headings: new institutional economics, experimental economics (E.E.), or behavioral and evolutionary economics, to name a few. In contrast, agent-based modelling is an active area of research with successful applications in engineering and science. In this paper we discuss the application of MultiAgent Systems (M.A.S.) to handle the social dimension of economics, and we design an appropriate artificial agent who is "resource-bounded-rational". We simulate alternative market trading institutions, which have been extensively studied in E.E. We demonstrate the possibilities of an artificial agent to accommodate alternative market institutions; thus extending the scope and use of E.E., which, so far, needs real agents.