Agent-based models and individualism: is the world agent-based?

Agent-based models (ABMs) are an increasingly popular tool in the social sciences. This trend seems likely to continue, so that they will become widely used in geography and in urban and regional planning. We present an overview of examples of these models in the life sciences, economics, planning, sociology, and archaeology. We conclude that ABMs strongly tend towards an individualist view of the social world. This point is reinforced by closer consideration of particular examples. This discussion pays attention to the inadequacy of an individualist model of society with reference to debates in social theory. We argue that because models are closed representations of an open world it is important that institutions and other social structures be explicitly included, or that their omission be explained. A tentative explanation for the bias of ABMs is offered, based on an examination of early research in artificial intelligence and distributed artificial intelligence from which disciplines the approach is derived. Some implications of these findings are discussed. We indicate some useful research directions which are beginning to tackle the individualism issue directly. We further note that the underlying assumptions of ABMs are often hidden in the implementation details. We conclude that such models must be subject to critical examination of their assumptions, and that model builders should engage with social theory if the approach is to realise its full potential

Econophysics: agent-based models

This article is the second part of a review of recent empirical and theoretical developments usually grouped under the heading Econophysics. In the first part, we reviewed the statistical properties of financial time series, the statistics exhibited in order books and discussed some studies of correlations of asset prices and returns. This second part deals with models in Econophysics from the point of view of agent-based modeling. Of the large number of multiagent- based models, we have identified three representative areas. First, using previous work originally presented in the fields of behavioral finance and market microstructure theory, econophysicists have developed agent-based models of order-driven markets that we discuss extensively here. Second, kinetic theory models designed to explain certain empirical facts concerning wealth distribution are reviewed. Third, we briefly summarize game theory models by reviewing the now classic minority game and related problems.

Validation of agent-based models

The automatic collection of customer transaction data, through either online shops or reward cards, is producing very large databases which contain much information about consumer behaviour. What kind of information and how exploitable it is are very relevant questions. Two approaches are being used. Either one concentrates on individual behaviour and tries to apply various theoretical frameworks and results of the literature on discrete choice, or one uses clustering algorithms in order to determine several classes of customers. The very existence of such categories is likely to be the result of social interactions and influences. The literature on discrete choice cannot easily be generalised to networked interactions, which are known to be widely present in various contexts. Another approach is to use toy models of individual behaviour and concentrate on global, aggregate quantities such as market share or demand fluctuations. This raises the question of how to validate such kind of model, hence the request of Unilever. The latter should also be understood with respect to the contribution of ESGI 2004, where a very sophisticated agent-based model of consumer behaviour was proposed (but not much studied)

Learning in agent based models

This paper examines the process by which agents learn to act in economic environments. Learning is particularly complicated in such situations since the environment is, at least in part, made up of other agents who are also learning. At best, one can hope to obtain analytical results for a rudimentary model. To make progress in understanding the dynamics of learning and coordination in general cases one can simulate agent based models to see whether the results obtained in skeletal models translate into the more general case. Using this approach can help us to understand which are the crucial assumptions in determining whether learning converges and, if so, to which sort of state. Three examples are presented, one in which agents learn to form trading relationships, one in which agents misspecify the model of their environment and a last one in which agents may learn to take actions which are systematically favourable, (or unfavourable) for them. In each case simulating models in which agents operate with simple rules in a complex environment, allows us to examine the role of the type of learning process used by the agents the extent to which they coordinate on a final outcome and the nature of that outcome.Learning; agent based models; simulations; equilibria; asymmetric outcomes