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Agent-Based Computational Economics: A Constructive Approach to Economic Theory

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  • Tesfatsion, Leigh

Abstract

This chapter explores the potential advantages and disadvantages of Agent-based Computational Economics (ACE) for the study of economic systems. General points are concretely illustrated using an ACE model of a two-sector decentralized market economy. Six issues are highlighted: Constructive understanding of production, pricing, and trade processes; the essential primacy of survival; strategic rivalry and market power; behavioral uncertainty and learning; the role of conventions and organizations; and the complex interactions among structural attributes, behaviors, and institutional arrangements. Extensive annotated pointers to ACE surveys, research, course materials, and software can be accessed here: http://www2.econ.iastate.edu/tesfatsi/ace.htm

Suggested Citation

  • Tesfatsion, Leigh, 2006. "Agent-Based Computational Economics: A Constructive Approach to Economic Theory," Staff General Research Papers Archive 12514, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:12514
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    Keywords

    agent-based computational economics; Learning; network formation; decentralized market economy;

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D2 - Microeconomics - - Production and Organizations
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • E - Macroeconomics and Monetary Economics

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