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From Individual Learning to Market Equilibrium: Correcting Structural and Parametric Biases in RL Simulations of Economic Models

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Listed:
  • Ruxin Chen
  • Zeqiang Zhang

Abstract

The application of Reinforcement Learning (RL) to economic modeling reveals a fundamental conflict between the assumptions of equilibrium theory and the emergent behavior of learning agents. While canonical economic models assume atomistic agents act as `takers' of aggregate market conditions, a naive single-agent RL simulation incentivizes the agent to become a `manipulator' of its environment. This paper first demonstrates this discrepancy within a search-and-matching model with concave production, showing that a standard RL agent learns a non-equilibrium, monopsonistic policy. Additionally, we identify a parametric bias arising from the mismatch between economic discounting and RL's treatment of intertemporal costs. To address both issues, we propose a calibrated Mean-Field Reinforcement Learning framework that embeds a representative agent in a fixed macroeconomic field and adjusts the cost function to reflect economic opportunity costs. Our iterative algorithm converges to a self-consistent fixed point where the agent's policy aligns with the competitive equilibrium. This approach provides a tractable and theoretically sound methodology for modeling learning agents in economic systems within the broader domain of computational social science.

Suggested Citation

  • Ruxin Chen & Zeqiang Zhang, 2025. "From Individual Learning to Market Equilibrium: Correcting Structural and Parametric Biases in RL Simulations of Economic Models," Papers 2507.18229, arXiv.org, revised Oct 2025.
  • Handle: RePEc:arx:papers:2507.18229
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    References listed on IDEAS

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    1. Michael Curry & Alexander Trott & Soham Phade & Yu Bai & Stephan Zheng, 2022. "Analyzing Micro-Founded General Equilibrium Models with Many Agents using Deep Reinforcement Learning," Papers 2201.01163, arXiv.org, revised Feb 2022.
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    4. Tohid Atashbar & Rui Aruhan Shi, 2023. "AI and Macroeconomic Modeling: Deep Reinforcement Learning in an RBC model," IMF Working Papers 2023/040, International Monetary Fund.
    5. Tesfatsion, Leigh, 2006. "Agent-Based Computational Economics: A Constructive Approach to Economic Theory," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 16, pages 831-880, Elsevier.
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