On-Line Guide for Newcomers to ABM (Axelrod and Tesfatsion)
On-Line Guide for Newcomers to
Agent-Based Modeling in the Social Sciences
Robert Axelrod and Leigh Tesfatsion
- Last Updated: 25 April 2017
- Site Maintained By:
- Professor of Econ, Math, and ECpE
- Department of Economics
- Iowa State University
- Ames, Iowa 50011-1070
- (515) 294-0138
tesfatsi AT iastate.edu
- This site provides web support materials (readings and demonstration
software) for Robert Axelrod and Leigh Tesfatsion, "A Guide for Newcomers
to Agent-Based Modeling in the Social Sciences"
Appendix A (pp. 1647-1659) in Leigh Tesfatsion and Kenneth L. Judd (Eds.), Handbook of
Computational Economics, Vol. 2: Agent-Based Computational Economics
(Table of Contents,html),
Handbooks in Economics Series, Elsevier/North-Holland, Amsterdam, the Netherlands, 2006.
- The authors thank Catherine Dibble, Stephanie Forrest, Ross Hammond, Ken
Judd, Tom Lairson, Irene Lee, Bob Marks, John Miller, Scott Page, and Rick
Riolo for helpful advice. The first author thanks the National Science
Foundation (Grant No. 0240852) and the LS&A Enrichment Fund of the University
of Michigan for financial support.
TABLE OF CONTENTS
- Purpose of the On-Line Guide
- Agent-Based Modeling and the Social
- Selection Criteria
- Suggested Readings and Demonstration
- Complexity and ABM
- Emergence of Collective Behavior
- Institutional Design
- Modeling Techniques
- What to Do Next
Software Release Disclaimer:
- All demonstration software provided below is unsupported and provided
as-is, without warranty of any kind, unless otherwise specified by the
PURPOSE OF THE ON-LINE GUIDE
- The purpose of this on-line guide is to suggest a short list of introductory
readings and supporting materials to help newcomers become acquainted with
Agent-Based Modeling (ABM). Our primary intended audience is graduate
students and advanced undergraduate students in the social sciences.
Teachers of ABM might also find this guide of use.
- Unlike established methodologies such as statistics and mathematics, ABM has
not yet developed a widely shared understanding of what a newcomer should
learn. For decades, concepts such as the level of significance in statistics
and the derivative in mathematics have been common knowledge that newcomers
could be expected to learn. We hope that our selected readings and
supporting materials will promote a shared understanding of ABM in the social
sciences, not only among newcomers to ABM but also among researchers who
already use ABM.
- As a clarifying note on terminology, although this on-line guide is directed
specifically to social scientists, researchers in a wide range of disciplines
are now using ABM to study complex systems. When specialized to
computational economic modeling, ABM reduces to
AGENT-BASED MODELING AND THE SOCIAL SCIENCES
The social sciences seek to understand not only how individuals behave but
also how the interaction of many individuals leads to large-scale outcomes.
Understanding a political or economic system requires more than an
understanding of the individuals that comprise the system. It also requires
understanding how the individuals interact with each other, and how the
results can be more than the sum of the parts.
ABM is well suited for this social science objective. It is a method for
studying systems exhibiting the following two properties: (1) the system is
composed of interacting agents; and (2) the system exhibits emergent
properties, that is, properties arising from the interactions of the agents
that cannot be deduced simply by aggregating the properties of the agents.
When the interaction of the agents is contingent on past experience, and
especially when the agents continually adapt to that experience, mathematical
analysis is typically very limited in its ability to derive the dynamic
consequences. In this case, ABM might be the only practical method of
ABM begins with assumptions about agents and their interactions and then uses
computer simulation to generate "histories" that can reveal the dynamic
consequences of these assumptions. Thus, ABM researchers can investigate how
large-scale effects arise from the micro-processes of interactions among many
agents. These agents can represent people (say consumers, sellers, or
voters), but they can also represent social groupings such as families,
firms, communities, government agencies and nations.
Simulation in general and ABM in particular is a third way of doing science
in addition to deduction and induction. Scientists use deduction to derive
theorems from assumptions, and induction to find patterns in empirical data.
Simulation, like deduction, starts with a rigorously specified set of assumptions
regarding an actual or proposed system of interest; but, unlike deduction, simulation
does not prove theorems with generality. Rather, simulation generates data suitable
for analysis by induction. In contrast to typical induction, however, the simulated
data comes from controlled experiments rather than from direct measurements of the
Consequently, simulation differs from standard deduction and induction
in both its implementation and its goals. Simulation permits increased understanding
of systems through controlled computational experiments.
The specific goals pursued by ABM researchers take four forms: empirical,
normative, heuristic, and methodological. The goal of empirical
understanding asks: Why have particular large-scale regularities evolved
and persisted, even when there is little top-down control? Examples of such
regularities include standing ovations, trade networks, socially accepted
monies, mutual cooperation based on reciprocity, and social norms. ABM
researchers seek possible explanations grounded in the repeated interactions of
agents operating in specified environments. In particular, they ask whether
particular types of observed global regularities can be reliably generated
from particular types of agent-based models.
A second goal is normative understanding: How can agent-based models
be used as laboratories for the discovery of good designs? ABM researchers
pursuing this objective are interested in evaluating whether designs proposed
for social policies, institutions, or processes will result in socially
desirable system performance over time. Examples include design of auction
systems, voting rules, and law enforcement. The general approach is akin to
filling a bucket with water to determine if it leaks. An agent-based world is
constructed that captures the salient aspects of a social system operating
under the design. The world is then populated with privately motivated agents
with learning capabilities and allowed to develop over time. The key issue is
the extent to which the resulting world outcomes are efficient, fair, and
orderly, despite attempts by these privately motivated agents to gain
individual advantage through strategic behavior.
A third goal is heuristic: How can greater insight be attained about
the fundamental causal mechanisms in social systems? Even if the assumptions
used to model a social system are simple, the consequences can be far from
obvious if the system is composed of many interacting agents. The large-scale
effects of interacting agents are often surprising because it can be hard to
anticipate the full consequences of even simple forms of interaction. For
example, one of the earliest and most elegant agent-based models - the city
segregation (or "tipping") model developed by Thomas Schelling (see below) -
demonstrates how residential segregation can emerge from individual choices
even when everyone is fairly tolerant.
A fourth goal is methodological advancement: How best to provide ABM
researchers with the methods and tools they need to undertake the rigorous
study of social systems through controlled computational experiments,
and to examine the compatibility of experimentally-generated theories
with real-world data? ABM researchers are exploring a variety of ways to
address this goal ranging from careful consideration of methodological
principles to the practical development of programming, visualization,
and empirical validation tools.
In summary, ABM applied to social processes uses concepts and tools from
social science and computer science. It represents a methodological approach
that could ultimately permit two important developments: (1) the rigorous
testing, refinement, and extension of existing theories that have proved to
be difficult to formulate and evaluate using standard statistical and
mathematical tools; and (2) a deeper understanding of fundamental causal
mechanisms in multi-agent systems whose study is currently separated by
artificial disciplinary boundaries.
For more detailed discussions of many of the points raised in this
section, see Robert Axelrod, Complexity of Cooperation (1997,
Princeton University Press, Princeton, NJ), especially pp. 206-221, and Leigh
Tesfatsion, "Agent-Based Computational Economics: A Constructive Approach to
in Leigh Tesfatsion and Kenneth L. Judd (Eds.), Handbook of
Computational Economics, Vol. 2: Agent-Based Computational Economics
(Table of Contents and Abstracts),
Handbooks in Economics Series, North-Holland/Elsevier, Amsterdam, the Netherlands, 2006, 904pp.
We decided at the outset to offer a short list of readings rather than make
any attempt at comprehensiveness. We based our selections on two criteria:
(i) the educational value of the reading for newcomers to ABM in the social
sciences; and (ii) the accessibility of the reading. The specific choice of
topics and readings is our own. We recognize that our selections are personal
and necessarily somewhat arbitrary.
SUGGESTED READINGS AND DEMONSTRATION SOFTWARE
COMPLEXITY AND ABM
- Callahan, Paul, "What is the Game of Life?"
Description: This interactive website explains and
demonstrates a delightful "game" invented by John Conway in 1970. Although the Game of Life is not an agent-based model, it is a fascinating illustration of how just three simple behavioral rules can lead to extremely complicated outcomes.
Additional Game of Life Demonstration Software
Chen, Shu-Heng, "Varieties of Agents in Agent-Based Computational Economics: A Historical and an Interdisciplinary Perspective"
Journal of Economic Dynamics and Control, 2011, to appear.
- Abstract: This thoughtful and comprehensive study traces the origins of agent-based computational economics (ACE) through four different gateways: namely, study of market processes; study of cellular automata with fixed rules of behavior; evolution-of-cooperation tournaments with programmed strategies; and experiments with autonomous human-like agents (artificial life).
- de Marchi, Scott, and Scott E. Page, Agent-Based Models
Annual Review of Political Science 17 (2014), 1-20.
- Abstract: Although slanted towards political science, this wide-ranging ABM survey provides a useful general discussion of ABM capabilities.
- Schelling, Thomas C. (1978), Micromotives and Macrobehavior,
Norton, New York, NY, pp. 137-157.
- Abstract: This classic work demonstrates what can
happen when behavior in the aggregate is more than the simple summation of
individual behaviors. The highlighted pages present an agent-based model, commonly
referred to as either the Schelling Segregation Model or the Shelling Tipping Game,
that shows how a high degree of
residential segregation can emerge from the location choices of fairly tolerant individuals.
- Note: Schelling is a co-recipient of the 2005 Bank of
Sweden Prize in Economic Sciences in Honor of Alfred Nobel (also known as the Nobel Prize in Economics).
- Tesfatsion, Leigh (2008), Agent-Based Modeling: A Bridge Between Games & Social Sciences
- Abstract: This short presentation, designed for younger newcomers to Agent-Based Modeling (ABM), starts by giving a brief introduction to ABM using examples from the movies. It next invites readers to participate in a "hands on" demonstration of ABM by playing a version of the Schelling Tipping Game using a checkerboard and tokens. (The Schelling Tipping Game was first introduced in 1978 by Tom Schelling in Micromotives and MacroBehavior --- see the previous entry.) It then introduces readers to the Schelling Tipping Game Demonstration Software
developed by Chris Cook (see below) as well as the SimSeg test bed, an elaboration of the Schelling Tipping Game suitable for serious social science research. It concludes by pointing readers to a website where numerous commercial applications of ABM are discussed.
Schelling Tipping Game Demonstration Software
(2000), "Complexity: The Bigger Picture"
Vol. 418, July 11, p. 131.
In this short essay, Vicsek describes how computer simulation fits
into the scientific enterprise. The goal is to "capture the principal laws
behind the exciting variety of new phenomena that become apparent when the
many units of a complex system interact.
Other Introductory Materials on Complexity and Agent-Based Modeling
Other Demonstration Software
EMERGENCE OF COLLECTIVE BEHAVIOR
Granovetter, Mark (1978), "Threshold Models of Collective Behavior",
American Sociological Review, Vol. 83, pp. 1420-1442.
Published article available at
- Abstract: Threshold models are a class of
mathematically tractable models that do not require ABM to determine the
global behavior that will emerge from individual choices. In a threshold
model, the key specification is each agent's threshold for each of its
possible actions, i.e., the proportion of agents who must prefer to take a
particular action before the given agent will prefer to take this action.
Granovetter develops a threshold model in which each agent has the same two
alternative actions and the thresholds for these actions differ across
agents. For a given frequency distribution of thresholds, the model
calculates the equilibrium number of agents taking each action. One
suggested application is to civil violence, in which each agent must decide
whether or not to join a riot. It is interesting to compare Granovetter's
threshold model outcomes to the richer outcomes obtained for an agent-based
model of civil violence in the following article by Joshua Epstein.
Epstein, Joshua M. (2002), "Modeling Civil Violence: An Agent-Based
Proceedings of the National Academy of
Sciences, U.S.A., Vol. 99, pp. 7243-7250.
Published article available (in 2005) at
- Abstract: Epstein uses a spatial agent-based model to
explore civil violence. A central authority uses "cops" to arrest (remove)
actively rebelling citizens from the society for a specified jail term. In
each time step, each agent (cop or citizen) randomly moves to a new
unoccupied site within its limited vision. A rebelling citizen's estimated
arrest probability is assumed to fall as the ratio of actively rebelling
citizens to cops that the citizen perceives in its vicinity increases. Each
citizen in each time step decides whether to actively rebel or not depending
on this perceived ratio. Epstein shows how the complex dynamics resulting
from these simple assumptions can generate empirically interesting
macroscopic regularities that are difficult to analyze using more standard
Cederman, Lars-Erik (2003), "Modeling the Size of Wars"
American Political Science Review, Vol. 97, pp. 135-150.
Published article available (in 2007) at
- Abstract: Power-law distributions, scaling laws, and
self-organized criticality are features of many frequency distributions, from
word usage to avalanches, and from firms to cities. A set of events is said
to behave in accordance with a power law distribution if large events
are rarer than small events, and specifically if the frequency of an event is
inversely proportional to its size. An example is the distribution of
the sizes of wars. Cederman uses an agent-based model of war and state
formation in the context of technological change to account for this observed
regularity. His paper is a good example of how a fairly complicated model
and its implications can be clearly presented, with details left to an
Miller, John, and Scott E. Page (2004), "The Standing Ovation
Vol. 9, No. 5, May/June, pp. 8-16.
Published article available at journal back-issues site at
- Abstract: Miller and Page use audience ovation to
introduce many key ABM themes, in particular the emergence of collective
behavior, and to provide specific modeling suggestions suitable for
implementation by newcomers to the field. As a public performance draws to a
close, and audience members begin to applaud and some even tentatively to
stand, will a standing ovation ensue or not? This is the famous Standing
Ovation Problem (SOP) inspired by the seminal work of Thomas Schelling on
the relationship between micro decisions and macro behaviors (see the Section
on Complexity and ABM, above). Miller and Page use the SOP to illustrate how
complex social dynamics can arise from the interactions among simple personal
choices, in this case to stand or not. They argue (p. 9) that the success of
the SOP as an expository device is that it forces modelers "to confront the
core methodological issue in complex adaptive social systems, namely, how
does one model a system of thoughtful, interacting agents in time and space?"
Dawkins, Richard (1989), The Selfish Gene, Oxford University Press,
New Edition, Oxford, UK, pp. 1-45.
- Abstract: If you are going to read only one book on evolution, this delightful and insightful book is a good choice. You will be amazed at the implications of the inclusive fitness perspective.
Evolution of Dawkins Biomorphs: Interactive Demo
Sigmund, Karl (1993), Games of Life: Explorations in Ecology, Evolution, and Behavior, Oxford University Press, Oxford, UK, pp. 155-206.
- Abstract: Writing in a lively and engaging style, Sigmund provides a non-technical introduction to models of evolution. Topics include population ecology and chaos, random drift and chain reactions, population genetics, evolutionary game theory, and the evolution of cooperation based on reciprocity. The highlighted pages cover the latter two topics, of most relevance to social scientists.
H. Allen Orr,
"Dennett's Strange Idea",
Boston Review, Summer 1996. In the course of reviewing Daniel C. Dennett's book Darwin's Dangerous Idea (Simon and Schuster, 1996), Orr provides a provocative wide-ranging discussion of natural selection in relation to both biological and cultural evolution.
Other Readings on Biological Evolution
and Social Evolution
Other Demonstration Software
- Andy Clark, Being There: Putting Brain, Body, and World Together Again
MIT Press, 308 pp., 1997, ISBN 0-262-53156-9.
- Abstract: In this delightfully written book, Clark addresses foundational questions about how people (and robots) can make sense of the confusing world in which they live. He brings together ideas and techniques from robotics, neuroscience, infant psychology, and artificial intelligence. He addresses a broad range of adaptive behaviors, from cockroach locomotion to the role of linguistic artifacts in higher-level thought.
Holland, John (1992), "Genetic Algorithms"
Scientific American, Vol. 267, July, pp. 66-72.
- Abstract: The genetic algorithm is a search technique inspired by the evolutionary effectiveness of mutation and differential reproduction. The algorithm provides a convenient way to model agents of limited rationality that adapt and/or evolve over time. Each agent might be responding to a fixed environment, or to an every-changing social environment consisting of many agents who are continually adapting to each other. The article by Rick Riolo in the same issue shows how to incorporate a genetic algorithm in one's own agent-based model.
Vriend, Nicolaas (2000), "An Illustration of the Essential Difference Between Individual and Social Learning, and its Consequence for Computational Analyses"
Journal of Economic Dynamics and Control, Vol. 24, pp. 1-19.
- Abstract: Vriend focuses on the importance of the level of learning for computational agents. An agent is said to employ individual-level learning when it learns from its own past experiences, and to employ population-level learning when it learns from other agents, e.g., through mimicry of their observed behaviors. Using a simple market model for concrete illustration, Vriend demonstrates that substantially different outcomes can result when firms use individual-level genetic algorithm learning versus population-level genetic algorithm learning.
- Other Introductory ABM Materials on Learning
The Trade Network Game Demo: Genetic Algorithm Learning
Other Demonstration Software
- Axelrod, Robert (1984), The Evolution of Cooperation
Basic Books Inc., New York, NY.
- Abstract: Robert Axelrod conducted two computer
tournaments to find an effective strategy for the Iterated Prisoner's Dilemma (IPD). Surprisingly, the simplest strategy submitted was the winner in both tournaments. The winning strategy was Tit-For-Tat, the strategy that cooperates on the first move and thereafter does whatever the other player did in the previous move. The selected chapters explain why understanding the IPD is important, how tournament results reveal what it takes to be successful in this context, and why reciprocity works well when paired with a wide range of strategies. Other chapters describe applications (including the "live and let live" system in trench warfare in World War I), provide theorems about the evolution of cooperation, and offer advice on how to promote cooperation.
Axelrod Tournament Demonstration Software
- Axelrod, Robert (1986), "An Evolutionary Approach to Norms"
American Political Science Review, Vol. 80, pp. 1095-1111.
- Abstract: This article develops an agent-based model
with a simple form of learning using the genetic algorithm to explore what
can happen when many agents adapt to each other's behavior over time. Agents
can be more or less bold (say by cheating), and more or less vengeful (say by
reporting cheaters). The model shows the conditions under which a collective
action problem can be solved by a self-sustaining metanorm: punish those who
do not enforce the norm because others might punish you for not doing so.
- Nowak, Martin A., Page, Karen M., and Karl Sigmund (2000), "Fairness
Versus Reason in the Ultimatum Game", Science, Vol. 289, September
8, pp. 1773-1775.
Published article freely available at
The Science Magazine.
- Abstract: The authors consider the Ultimatum
Game in which two players are offered a chance to win a certain sum of
money. One player, the proposer, gets to offer a portion of the sum to the
other player, retaining the rest. The second player gets to accept or reject
the offer, with rejection resulting in no money for either player. The
rational solution, according to game theory, is for the proposer to offer as
little as possible and for the other player to accept. When humans play the
game, however, the most frequent offer is an equal ("fair") share. The
authors employ evolutionary dynamics to explain how this "irrational"
anchoring on fair shares might have evolved among humans in part through a
rational concern for reputation. Specifically, accepting low offers, if
generally known and remembered, increases the chances of receiving low offers
in subsequent encounters; and making low offers becomes irrational if low
offers are not accepted.
Epstein, Joshua M. (2001), "Learning to be Thoughtless: Social Norms and
Computational Economics Vol. 18, 9-24.
- Abstract: Epstein uses an agent-based model to study
experimentally an important observed aspect of social norm evolution: namely,
that the amount of time an individual devotes to thinking about a behavior
tends to be inversely related to the strength of the social norms that relate
to this behavior. In the limit, once a behavioral norm is firmly entrenched
in a society, individuals tend to conform to the norm without explicit
thought. Epstein's innovative model permits agents to learn how to behave
(what behavioral norm to adopt) but it also permits agents to learn how much
to think about how to behave.
- Other Introductory ABM Materials on Norms
- Other Demonstration Software
- Albin, Peter, and Duncan K. Foley (1992), "Decentralized, Dispersed Exchange Without an Auctioneer", Journal of Economic Behavior and Organization, Vol. 18, pp. 27-51.
Published article available from
- Abstract: Albin and Foley simulate pure exchange among geographically dispersed utility-seeking agents with endowments of two distinct types of goods, and with bounds to rationality and calculation. Exchange is entirely decentralized. The authors show that this decentralized exchange process achieves a substantial improvement in trader welfare relative to randomly allocated goods.
- Gode, D. K., and S. Sunder (1993), "Allocative Efficiency of Markets with Zero Intelligence Traders: Market as a partial substitute for individual rationality"
Journal of Political Economy, Vol. 101, pp. 119-137.
- Abstract: Gode and Sunder report on continuous double auction experiments with computational traders. They find that high market efficiency is generally obtained even when traders randomly select bids and offers from within their budget sets as long as these "zero intelligence" traders abide by certain protocols restricting the order of executed trades. The authors conclude that the high market efficiency typically observed in continuous double auction experiments with human subjects is due to the structure of the auction and not to learning. Their seminal work has highlighted an important issue now being actively pursued by many other researchers: what are the relative roles of learning and institutional arrangements in the determination of economic, social, and political outcomes?
Zero-Intelligence Trading Demonstration Software (Java Applet/NetLogo)
- LeBaron, Blake (2002), "Building the Santa Fe Artificial Stock
(Slides,pdf,99KB)], Working Paper, Brandeis University, June.
- Abstract: LeBaron provides an insider's look at the
construction of the Santa Fe Artificial Stock Market model. He considers the
many design questions that went into building the model from the perspective
of a decade of experience with agent-based financial markets. He also
provides an assessment of the model's overall strengths and weaknesses.
Santa Fe Stock Market Demonstration Software
- Other Introductory ABM Materials on Market Design
and Automated Markets for Internet Commerce
Other Demonstration Software
- Kollman, Kenneth, John H. Miller, and Scott E. Page (1997), "Political
Institutions and Sorting in a Tiebout Model", American Economic
Review, Volume 87, 977-992. Published article available at
- Abstract: The authors develop an agent-based model to
explore how social outcomes are affected by the political institutions used
to aggregate individual choices on local public goods issues, such as whether
or not to finance a community swimming pool. Examples of such political
institutions are referenda, two-party competition, and proportional
representation. For each tested political institution, assumed to be
commonly in use across all jurisdictions, citizens "vote with their feet" in
each time period regarding which jurisdiction they wish to inhabit. The
policy positions resulting in any given jurisdiction depend on the
preferences of the citizens located within that jurisdiction, in a manner
determined by the political institution in force. Citizens can continue to
relocate in response to changing local policy positions, and local policy
positions can continue to change in response to citizen relocations. The
authors find that social efficiency is highest under political institutions
such as two-party competition or proportional representation that initially
induce citizens to undertake a suitable degree of experimentation among
- Lansing, J. Stephen, and James N. Kremer (1993), "Emergent Properties of
Balinese Water Temple Networks: Coadaptation on a Rugged Fitness
American Anthropologist, Vol. 95, pp. 97-114.
Published article available at
- Abstract: Over hundreds of years, Balinese farmers
have developed an intricate hierarchical network of "water temples" dedicated
to agricultural deities in parallel with physical transformations of their
island deliberately undertaken to make it more suitable for growing irrigated
rice. The water temple network plays an instrumental role in the
coordination of activities related to rice production. Representatives of
different water temple congregations meet regularly to decide cropping
patterns, planting times, and water usage, thus helping to synchronize
harvests and control pest populations. Lansing and Kremer develop an
ecological simulation model to illuminate the system-level effects of the
water temple network, both social and ecological. Their anthropological
study illustrates many important ABM concepts, including emergent properties,
fitness landscapes, co-adaptation, and the effects of different institutional
- Simon, Herbert (1982),
"The Architecture of Complexity"
pp. 193-230 in The Sciences of the Artificial, Second Edition, The MIT Press, Cambridge, MA.
- Abstract: Simon informally defines a "complex system"
to be a system made up of a large number of parts that interact in a
non-simple way. He considers a number of complex systems encountered in the
behavioral sciences, from families to formal organizations, and describes
features that are common in a wide variety of such systems. His central theme
(p. 196) is that "complexity frequently takes the form of hierarchy and that
hierarchic systems have some common properties independent of their specific
content." He discusses the design advantages of nearly decomposable
subsystems with a hierarchical organization of their parts. He also
conjectures that complex systems evolve from simple systems much more rapidly
if there are stable intermediate forms along the way, hence evolution favors
hierarchic over non-hierarchic systems.
- Other Introductory ABM Materials on Institutional Design for
Management of Natural Resources
- Wilhite, Allen (2001), "Bilateral Trade and `Small-World'
Vol. 18, No. 1, August, pp. 49-64.
- Abstract: Wilhite develops an agent-based
computational model of a bilateral exchange economy. He uses this model to
explore the consequences of restricting trade to different types of networks,
including a "small-world network" with both local connectivity and global
reach. His key finding is that small-world networks provide most of the
market-efficiency advantages of completely connected networks while retaining
almost all of the transaction cost economies of locally connected networks.
Leigh Tesfatsion, "Notes on Wilhite (2001)"
- NOTE: These presentation slides summarize key points from the article by Wilhite (2001), linked above.
Wilhite Small-World Trade Network Demo
- Kirman, Alan P., and Nicolaas J. Vriend (2001), "Evolving Market
Structure: An ACE Model of Price Dispersion and Loyalty"
Journal of Economic Dynamics and Control, Vol. 25, Nos. 3-4, pp. 459-502.
- Abstract: Social scientists typically study the
implications of given interaction networks, e.g., friendship or trade
networks. An important aspect of many social systems, however, is how agents
come to form interaction networks. Kirman and Vriend address this issue in
the context of an agent-based computational model capturing salient
structural aspects of the actual wholesale fish market in Marseilles, France.
Two features characterizing this actual market are: (a) loyalty relationships
(persistent trade partnerships) between particular buyers and sellers; and
(b) persistent price dispersion unexplainable by observable characteristics
of the fish. The simulation results show that loyalty relationships can
indeed emerge naturally between particular buyer-seller pairs as the buyers
and sellers co-evolve their trading rules over time. Buyers learn to become
loyal to particular sellers while, at the same time, sellers learn to offer
higher payoffs (lower prices and more reliable supplies) to their more loyal
buyers. Moreover, this evolving trade network supports persistent price
dispersion over time.
The Trade Network Game Demo: Network Formation
- Other Introductory Materials on ABM Network Research
General Introductory Materials on Network Formation
- Macy, Michael W., and Robert Willer (2002), "From Factors to Actors:
Computational Sociology and Agent-Based Modeling"
Annual Review of Sociology, Vol. 28, pp. 143-166.
Published article available at
- Abstract: While written for sociologists, this review article should be of value to all agent-based modelers. It places ABM in its historical context, explains its meaning and goals, provides many good examples, and offers useful advice to those who want to try it for themselves. Other articles with explicit modeling advice include LeBaron (2002) and Miller and Page (2004) cited above.
- Tesfatsion, Leigh (2017), "Modeling Economic Systems as
Locally-Constructive Sequential Games"
Economics Working Paper No. 17022, Iowa State University, Ames, IA, Latest Version: April 2017.
Real-world economies are open-ended dynamic systems consisting of heterogeneous interacting participants. Human participants are decision-makers who strategically take into account the past actions and potential future actions of other participants. All participants are forced to be locally constructive, meaning their actions at any given time must be based on their local states; and participant actions at any given time affect future local states. Taken together, these essential properties imply real-world economies are locally-constructive sequential games. This paper discusses a modeling approach, Agent-based Computational Economics (ACE), that permits researchers to study economic systems from this point of view. ACE modeling principles and objectives are first concisely presented and explained. The remainder of the paper then highlights challenging issues and edgier explorations that ACE researchers are currently pursuing.
- Tesfatsion, Leigh (2016), Elements of Dynamic Economic Modeling: Presentation and Analysis
Eastern Economic Journal 43(2), 2016, 192-216. doi:10.1057/eej.2016.2
- Abstract: The primary goal of these introductory notes is to promote the clear presentation and rigorous analysis of dynamic economic models, whether expressed in equation or agent-based form. A secondary goal is to promote the use of initial-value state space modeling with its regard for historical process, for cause leading to effect without the external imposition of global coordination constraints on agent actions. Economists who claim to respect individual
rationality should not be doing for their modeled economic agents what in reality these agents must do for themselves.
Other Introductory ABM Materials on Modeling Techniques
WHAT TO DO NEXT
Browse a comprehensive website
computational economics (ACE) in particular and agent-based modeling (ABM) more generally. At this site you will find ABM/ACE researchers in your neck of the woods, links to specific ABM/ACE research sites, course syllabi, demonstration software, and much more.
Directly access introductory ABM/ACE materials,
posted with annotated links.
that publish a good deal of ABM/ACE research. Journals of particular interest for ACE researchers include:
Games and Economic Behavior (Elsevier);
Journal of Economic Behavior and Organization (Elsevier);
Journal of Economic Dynamics and Control (Elsevier);
Journal of Economic Interaction and Coordination (Springer);
Computational Economics (Springer);
Journal of Artificial Societies and Social Simulation (online, open access);
and Complexity (Wiley/Hindawi, open access).
- Master mathematical and statistical tools commonly
used in ABM/ACE by studying basic mathematical analysis (especially probability theory and non-linear dynamics), game theory, and elementary statistics (e.g., hypothesis testing and regression).
Learn a programming language
so that you can try your hand at
building and running your own ABM/ACE models.
- For younger first-time programmers, we recommend
a visual programming tool that lets students and teachers create 3D games and simulations for understanding complex systems.
StarLogo Nova has been specifically designed to be
user-friendly for K-12 students. It can be used to model many
real-life phenomena such as bird flocks, traffic jams, ant colonies, and
simple market economies. Extensive support materials (tutorials, demos, users discussion group,...) are provided at the StarLogo Nova website.
- For older first-time programmers, we recommend an object-oriented programming (OOP) language such as Java or Python, possibly supplemented with an ABM toolkit (see below). A good basic introduction to OOP for beginners is Matt Weisfeld, The
Object Oriented Thought Process (Fourth Edition,
Addison-Wesley Professional, 2013, or latest edition). Another programming language possibility for older beginners is
which is steadily increasing its ABM/ACE capabilities.
For experienced programmers new to ABM/ACE, who are interested in using ABM for serious research purposes, we recommend an Object-Oriented Programming (OOP) language such as Java or Python. To attain needed computational speed for larger applications, recourse to C++ or other languages for implementation of agent methods might be required. High-Level Architecture (HLA) frameworks can be used to facilitate coordination and communication among ABM components.
Explore the many ABM/ACE toolkits
available to assist agent-based modelers with common tasks such as constructing agents and displaying output in the form of tables, charts, graphs, and movies.
For example, one possible ABM toolkit -- highly recommended for beginners -- is
a cross-platform multi-agent programming environment with an easily navigated
graphical user interface. Another possibility is
specifically designed for agent-based modeling in the social sciences. Repast
supports model development in Java, C#, and Python and runs on virtually all
modern computing platforms. Still another possibility is
a fast discrete-event multiagent simulation library designed to be the foundation for large
custom-purpose Java simulations. All three ABM toolkits are actively maintained and
freely downloadable, and each has attracted a growing community of users.
The features and comparative capabilities of the three ABM toolkits NetLogo, Repast, and MASON are explored through the step-by-step development of a common template model at the following highly useful site maintained by Steven F. Railsback et al.:
A Template Model for ABM Platforms.
Important Update: Alan G. Isaac, "The ABM Template Models: A Reformulation with Reference Implementations"
Journal of Artificial Societies and Social Simulation 14 (2) 5, March 2011. The author refines the Railsback et al. template models for agent-based modeling and offers new reference implementations. He also addresses some issues of design, flexiblility, and ease of use that are relevant to the choice of an agent-based modeling platform.
Start building ABM/ACE models
with the aid of computational laboratories accessible online, accompanied by tutorials and set-up documentation.
Explore special journal issues
and volumes of readings
devoted to ABM/ACE and related themes.
Read a wonderful introduction to computational aspects
of complex systems
by Gary William Flake, titled The Computational Beauty of Nature (MIT Press, Cambridge, MA, 1998).
Covered topics including fractals, chaos, cellular automata, neural networks, and a helpful glossary of terms.
Detailed information about Flake's book, along with source code and other supporting materials, can be found at the above site.
Copyright © Robert Axelrod and Leigh Tesfatsion.
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