"An Agent Based Cournot Simulation with Innovation: Identifying the Determinants of Market Concentration"

In this paper, I develop a hybrid model that contains elements of both agent based simulations (ABS) as well as analytic Cournot models, to study the effects of firm characteristics, market characteristics, and innovation on market concentration, as measured by a Herfindahl-Hirschman Index (HHI). The model accommodates the following components: multiple firms with heterogeneous marginal costs, market entry and exit, barriers to entry, low or high cost industries, changing demand, varying levels of marginal cost reducing returns-to-innovation, varying costs associated with innovation, increased returns to innovation from past experience innovating, and varying propensities to innovate within the market. The components mentioned above are commonly cited as determinants of market concentration. A sensitivity analysis which is robust to high degrees of model complexity demonstrates that the model provides results that are consistent with economic theories of markets.agent based simulation, Cournot, game, innovation, oligopoly

Resistance to learning and the evolution of cooperation

In many evolutionary algorithms, crossover is the main operator used in generating new individuals from old ones. However, the usual mechanism for generating offsprings in spatially structured evolutionary games has to date been clonation. Here we study the effect of incorporating crossover on these models. Our framework is the spatial Continuous Prisoner's Dilemma. For this evolutionary game, it has been reported that occasional errors (mutations) in the clonal process can explain the emergence of cooperation from a non-cooperative initial state. First, we show that this only occurs for particular regimes of low costs of cooperation. Then, we display how crossover gets greater the range of scenarios where cooperative mutants can invade selfish populations. In a social context, where crossover involves a general rule of gradual learning, our results show that the less that is learnt in a single step, the larger the degree of global cooperation finally attained. In general, the effect of step-by-step learning can be more efficient for the evolution of cooperation than a full blast one

Biology of Applied Digital Ecosystems

A primary motivation for our research in Digital Ecosystems is the desire to exploit the self-organising properties of biological ecosystems. Ecosystems are thought to be robust, scalable architectures that can automatically solve complex, dynamic problems. However, the biological processes that contribute to these properties have not been made explicit in Digital Ecosystems research. Here, we discuss how biological properties contribute to the self-organising features of biological ecosystems, including population dynamics, evolution, a complex dynamic environment, and spatial distributions for generating local interactions. The potential for exploiting these properties in artificial systems is then considered. We suggest that several key features of biological ecosystems have not been fully explored in existing digital ecosystems, and discuss how mimicking these features may assist in developing robust, scalable self-organising architectures. An example architecture, the Digital Ecosystem, is considered in detail. The Digital Ecosystem is then measured experimentally through simulations, with measures originating from theoretical ecology, to confirm its likeness to a biological ecosystem. Including the responsiveness to requests for applications from the user base, as a measure of the 'ecological succession' (development).Comment: 9 pages, 4 figure, conferenc

Business fluctuations in a behavioral switching model: Gridlock effects and credit crunch phenomena in financial networks

In this paper we characterize the evolution over time of a credit network in the most general terms as a system of interacting banks and firms operating in a three-sector economy with goods, credit and interbank market. Credit connections change over time via an evolving fitness measure depending from lenders’ supply of liquidity and borrowers’ demand of credit. Moreover, an endogenous learning mechanism allows agents to switch between a loyal or a shopping-around strategy according to their degree of satisfaction. The crucial question we investigate is how financial bubbles and credit-crunch phenomena emerge from the implemented mechanism

Resistance to learning and the evolution of cooperation

In many evolutionary algorithms, crossover is the main operator used in generating new individuals from old ones. However, the usual mechanism for generating offsprings in spatially structured evolutionary games has to date been clonation. Here we study the effect of incorporating crossover on these models. Our framework is the spatial Continuous Prisoner's Dilemma. For this evolutionary game, it has been reported that occasional errors (mutations) in the clonal process can explain the emergence of cooperation from a non-cooperative initial state. First, we show that this only occurs for particular regimes of low costs of cooperation. Then, we display how crossover gets greater the range of scenarios where cooperative mutants can invade selfish populations. In a social context, where crossover involves a general rule of gradual learning, our results show that the less that is learnt in a single step, the larger the degree of global cooperation finally attained. In general, the effect of step-by-step learning can be more efficient for the evolution of cooperation than a full blast one.Evolutionary games, Continuous prisoner's dilemma, Spatially structured, Crossover, Learning

A micro-meso-macro perspective on the methodology of evolutionary economics: integrating history, simulation and econometrics

Applied economics has long been dominated by multiple regression techniques. In this regard, econometrics has tended to have a narrower focus than, for example, psychometrics in psychology. Over the last two decades, the simulation and calibration approach to modeling has become more popular as an alternative to traditional econometric strategies. However, in contrast to the well-developed methodologies that now exist in econometrics, simulation/calibration remains exploratory and provisional, both as an explanatory and as a predictive modelling technique although clear progress has recently been made in this regard (see Brenner and Werker (2006)). In this paper, we suggest an approach that can usefully integrate both of these modelling strategies into a coherent evolutionary economic methodology.

Complex evolutionary systems in behavioral finance

Traditional finance is built on the rationality paradigm. This chapter discusses simple models from an alternative approach in which financial markets are viewed as complex evolutionary systems. Agents are boundedly rational and base their investment decisions upon market forecasting heuristics. Prices and beliefs about future prices co-evolve over time with mutual feedback. Strategy choice is driven by evolutionary selection, so that agents tend to adopt strategies that were successful in the past. Calibration of "simple complexity models" with heterogeneous expectations to real financial market data and laboratory experiments with human subjects are also discussed.