ACE Models of Endogenous Interactions

Various approaches used in Agent-based Computational Economics (ACE) to model endogenously determined interactions between agents are discussed. This concerns models in which agents not only (learn how to) play some (market or other) game, but also (learn to) decide with whom to do that (or not).Endogenous interaction, Agent-based Computational Economics (ACE)

Does eeasoning enhance learning?

Utilizing the well-known Ultimatum Game, this note presents the following phenomenon. If we start with simple stimulus-response agents, learning through naive reinforcement, and then grant them some introspective capabilities, we get outcomes that are not closer but farther away from the fully introspective game-theoretic approach. The cause of this is the following: there is an asymmetry in the information that agents can deduce from their experience, and this leads to a bias in their learning process.Ultimatum game, game theory, reasoning, reinforcement learning, Leex

A model of market-making

The two essential features of a decentralized economy taken into account are, first, that individual agents need some information about other agents in order to meet potential trading partners, which requires some communication or interaction between these agents, and second, that in general agents will face trading uncertainty. We consider trade in a homogeneous commodity. Firms decide upon their effective supplies, and may create their own markets by sending information signals communicating their willingness to sell. Meeting of potential trading partners is arranged in the form of shopping by consumers. The questions to be considered are: How do firms compete in such markets? And what are the properties of an equilibrium? We establish existence conditions for a symmetric Nash equilibrium in the firms' strategies, and analyze its characteristics. The developed framework appears to lend itself well to study many typical phenomena of decentralized economies, such as the emergence of central markets, the role of middlemen, and price-making.Decentralized trade, market--making, communication, trading uncertainty, Leex

An experimental study of adaptive behavior in an oligopolistic market game

We consider an oligopolistic market game, in which the players are competing firm in the same market of a homogeneous consumption good. The consumer side is represented by a fixed demand function. The firms decide how much to produce of a perishable consumption good, and they decide upon a number of information signals to be sent into the population in order to attract customers. Due to the minimal information provided, the players do not have a well--specified model of their environment. Our main objective is to characterize the adaptive behavior of the players in such a situation.Market game, oligopoly, adaptive behavior, learning, Leex

Schelling's Spatial Proximity Model of Segregation Revisited

Schelling [1969, 1971a, 1971b, 1978] presented a microeconomic model showing how an integrated city could unravel to a rather segregated city, notwithstanding relatively mild assumptions concerning the individual agents' preferences, i.e., no agent preferring the resulting segregation. We examine the robustness of Schelling's model, focusing in particular on its driving force: the individual preferences. We show that even if all individual agents have a strict preference for perfect integration, best-response dynamics will lead to segregation. What is more, we argue that the one-dimensional and two-dimensional versions of Schelling's spatial proximity model are in fact two qualitatively very different models of segregation.Neighborhood segregation, Myopic Nash Equilibria, Best-response dynamics, Markov chain, Limit-behavior.

On the Behavior of Proposers in Ultimatum Games

We demonstrate that one should not expect convergence of the proposals to the subgame perfect Nash equilibrium offer in standard ultimatum games. First, imposing strict experimental control of the behavior of the receiving players and focusing on the behavior of the proposers, we show experimentally that proposers do not learn to make the expected-payoff-maximizing offer. Second, considering a range of learning theories (from optimal to boundedly rational), we explain that this is an inherent feature of the learning task faced by the proposers, and we provide some insights into the actual learning behavior of the experimental subjects. This explanation for the lack of convergence to the subgame perfect Nash equilibrium in ultimatum games complements most alternative explanations.Ultimatum game, Non-equilibrium behavior, Laboratory experiment, Multi-armed bandit, Optimal learning, Gittins index, Bounded rationality

On the Behavior of Proposers in Ultimatum Games

We demonstrate that one should not expect convergence of the proposals to the subgame perfect Nash equilibrium offer in standard ultimatum games. First, imposing strict experimental control of the behavior of the receiving players and focusing on the behavior of the proposers, we show experimentally that proposers do not learn to make the expected-payoff-maximizing offer. Second, considering a range of learning theories (from optimal to boundedly rational), we explain that this is an inherent feature of the learning task faced by the proposers, and we provide some insights into the actual learning behavior of the experimental subjects. This explanation for the lack of convergence to the subgame perfect Nash equilibrium in ultimatum games complements most alternative explanations.Ultimatum game, Non-equilibrium behavior, Laboratory experiment, Multi-armed bandit, Optimal learning, Gittins index, Bounded rationality

Modelling shoreface profile evolution

Current knowledge of hydro-, sediment and morpho-dynamics in the shoreface environment is insufficient to undertake shoreface-profile evolution modelling on the basis of first physical principles. We propose a simple, panel-type model to map observed behaviour. The internal dynamics are determined by slope-dependent, wave-induced cross-shoreface transports, while the external driving factors are lateral sediment supply and sea-level rise. This model concept is tested with reasonable success against the observed behaviour of the Central Holland Coast, considering two hindcast periods, one covering the evolution over the last century, the other the Subboreal/Subatlantic evolution.\ud \ud A limitation of this model is that the cross-shoreface dynamics are solely steered by the variations of shoaling, short waves. Since a variety of other wave and current dynamics may be expected to be present in the coastal boundary layer, it may well be that the effects of the mechanisms and conditions which are not represented are hidden in the coefficients of the sediment-transport formula. This limits the accuracy of the coefficients as used, and our findings should be considered as an-order-of-magnitude estimate only. Indeed, behaviour-oriented modelling implies that generalization of results to arbitrary situations and conditions is not straightforward. Yet, we expect that some of the conclusions are more generally applicable.\ud \ud This concerns the substantiation of the assumption that the upper shoreface responds on a much smaller time scale than the lower shoreface, and the idea that the shoreface profile is not always and everywhere in equilibrium with its forcing. A worthwhile observation from the Holland Coast application is, that the bottom slope effect on the transport is only important at geological time scales. The profile evolution at the engineering time scales (say 10 to 100 years) is effectively quasi-static, in that there is no feedback between the long-term averaged transport and the state of the profile. This implies that at these smaller scales the profile changes can be predicted on the basis of a static sediment balance. This does not mean that the gravitational downslope transport is unimportant as a physical phenomenon in coastal profile evolution: It is only unimportant if a highly aggregated model like this is applied at relatively short time scales

Imitation of succesful behavior in Cournot markets

In an experimental standard Cournot Oligopoly we test the importance of models of behavior characterized by imitation of succesful behavior. We find that the players appear to the rather reluctant to imitate.Oligopoly, cournot, bounded rationality, spite effect, Leex

On the role of non-equilibrium focal points as coordination devices

Considering a pure coordination game with a large number of equivalent equilibria, we argue, first, that a focal point that is itself not a Nash equilibrium and is Pareto dominated by all Nash equilibria, may attract the players' choices. Second, we argue that such a non-equilibrium focal point may act as an equilibrium selection device that the players use to coordinate on a closely related small subset of Nash equilibria. We present theoretical as well as experimental support for these two new roles of focal points as coordination devices.Coordination game, Focal point, Nash equilibrium, Equilibrium selection, Coordination device, LeeX