A Model of Boundedly Rational Consumer Choice - An Agent Based Appraoch
The paper presents an extended version of the consumer choice problem. Different from the standard model, prices are not fixed but arise from Walrasian interactions of total demand and a stylized supply function for each of the goods. Three different types of evolutionary algorithms are set up to answer the question whether agents can learn to solve the problem of extended consumer choice. There are three important answers to this question: a) The quality of the results learned crucially depends on the elasticity of supply, which in turn is shown to be a measure of the degree of state dependency of the economic problem. b) It seems to be relatively easy to adhere to the budget constraint, but relatively difficult to reach an optimum with marginal utility per Dollar being equal for each good. c) Agents equipped with some memory are found to perform notably better than agents without memory.
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- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July. Full references (including those not matched with items on IDEAS)
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