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The Promises and Perils of Agent-Based Computational Economics

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  • Matteo Richiardi

Abstract

In this paper I review the main strengths and weaknesses of agent-based computational models. In particular I rationalise the main theoretical critiques, which point to the following problematic areas: (i) interpretation of the simulation dynamics, (ii) estimation of the simulation model, and (iii) generalisation of the results. I show that there exist solutions for all these issues. Moreover, this paper clarifies some confounding differences in terminology between the computer science and the economic literature.

Suggested Citation

  • Matteo Richiardi, 2003. "The Promises and Perils of Agent-Based Computational Economics," LABORatorio R. Revelli Working Papers Series 29, LABORatorio R. Revelli, Centre for Employment Studies.
    • Handle: RePEc:cca:wplabo:29
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    Cited by:

    1. Matteo Richiardi, 2004. "A Search Model Of Unemployment And Firm Dynamics," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 203-221.
    2. Giorgio Fagiolo & Paul Windrum & Alessio Moneta, 2006. "Empirical Validation of Agent Based Models: A Critical Survey," LEM Papers Series 2006/14, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    3. Matteo Richiardi, 2003. "The Promises and Perils of Agent-Based Computational Economics," LABORatorio R. Revelli Working Papers Series 29, LABORatorio R. Revelli, Centre for Employment Studies.
    4. Gobbi, Alessandro & Grazzini, Jakob, 2019. "A basic New Keynesian DSGE model with dispersed information: An agent-based approach," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 101-116.
    5. Juan Manuel Larrosa, 2016. "Agentes computacionales y análisis económico," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 18(34), pages 87-113, January-J.
    6. Paul Windrum & Giorgio Fagiolo & Alessio Moneta, 2007. "Empirical Validation of Agent-Based Models: Alternatives and Prospects," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 10(2), pages 1-8.
    7. Giorgio Fagiolo & Alessio Moneta & Paul Windrum, 2007. "A Critical Guide to Empirical Validation of Agent-Based Models in Economics: Methodologies, Procedures, and Open Problems," Computational Economics, Springer;Society for Computational Economics, vol. 30(3), pages 195-226, October.
    8. Babatunde, Kazeem Alasinrin & Begum, Rawshan Ara & Said, Fathin Faizah, 2017. "Application of computable general equilibrium (CGE) to climate change mitigation policy: A systematic review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 78(C), pages 61-71.
    9. Matteo Richiardi, 2003. "On the Use of Agent-Based Simulations," LABORatorio R. Revelli Working Papers Series 32, LABORatorio R. Revelli, Centre for Employment Studies.
    10. Nils ROLOFF & Ulrike LEHR & Wolfram KREWITT & Gerhard FUCHS & Sandra WASSERMANN & Wolfganf WEIMER-JEHLE & Bernd SCHMIDT, 2008. "Success Determinants for Technological Innovations in the Energy Sector - The Case of Photovoltaics," EcoMod2008 23800118, EcoMod.
    11. Weigt, Hannes, 2009. "A Review of Liberalization and Modeling of Electricity Markets," MPRA Paper 65651, University Library of Munich, Germany.
    12. Weidlich, Anke & Veit, Daniel, 2008. "A critical survey of agent-based wholesale electricity market models," Energy Economics, Elsevier, vol. 30(4), pages 1728-1759, July.
    13. Schuster, Stephan, 2012. "Applications in Agent-Based Computational Economics," MPRA Paper 47201, University Library of Munich, Germany.

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    More about this item

    Keywords

    Agent-based; Simulation; Microsimulation; Computational Economics; Structural Estimation; Economic methodology.;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • B59 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Other
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General

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