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Although the influence of intelligence on market performance has long been discussed, in this paper we provide a broader scope for examining this issue. The performance in a market composed of zero-intelligence traders is compared with that in a market where traders are endowed with the simple adaptive learning method or GP-based learning algorithm both without and with Boolean functions. Market properties such as the price, return, trading volume, and heterogeneity among traders are provided to analyze the role of intelligence. We find that the influence of intelligence on the market crucially depends on the representation of intelligence or the learning method [ABSTRACT FROM AUTHOR]

This study developed an agent-based model of firms' investment dynamics in education and training based on the cellular automata model. It turned the issue of the dynamics of education and training to an issue of spaces and conducted a simulation to analyze whether the strategy of firms investing in education and training will be profitable in the long term. The main results of this study can be summed up as follows: First, strategies that invest in education and training tend to be inferior to strategies that do not invest in education and training. However, even if the former strategies are inferior, a certain proportion of investing firms survive to exist in the long term. The outcome of the strategies does not largely depend on the initial proportion of education and training investment firms Second, an increase in learning speed works disadvantageously to firms that use education and training investment strategies. Third, a reduction in training cost brings a decrease in total production. Fourth, expanding the scope of information raises the productivity of a society, but acts negatively on firms that use education and training investment strategies. Fifth, an increase in the proportion of job searching due to a drop in search costs enhances the productivity of a society but works negatively on firms that use education and training investment strategies. Sixth, the government's support for training expenses increases total production and the proportion of firms that invested in education and training as well. [ABSTRACT FROM AUTHOR]

We analyze a market with two product alternatives that differ in quality. Consumers choose between these products based on consumer reviews and their own experience. We examine how the market share of the superior product is affected by (i) the number of reviews obtained by consumers; and (ii) the type of information conveyed in these reviews. We find that when consumers randomly sample reviews from the entire population, an increase in the number of reviews can decrease the market share of the superior product. This, however, is not the case when consumers seek out reviews on each product. Further, we find that the market share of the superior product can be significantly lower when reviews convey subjective satisfaction compared to when they convey objective payoffs. This effect depends on the degree of heterogeneity in consumer expectations. [ABSTRACT FROM AUTHOR]

The current contribution addresses the impact of high-frequency electronic liquidity provision strategies on the intraday dynamics of financial markets, by means of an artificial stock market. As novel design feature, an event-based intraday time implementation is proposed, allowing for the generation of time-stamped intraday events, which make possible both the aggregation of time series at various time frequencies, as well as the correct simulation of trading strategies that follow different temporal frequencies, e.g., low- and high-frequency. We provide new insights with respect to the determinants of extreme events, such as flash crashes. Finally, we compare the causal chains and the effectiveness of two potential regulatory policies under the same market circumstances, i.e., minimum resting time and financial-transaction taxes, not only with respect to their flash crash prevention power, but also regarding their impact on market participants and market quality, shedding new light on the policy trade-offs. [ABSTRACT FROM AUTHOR]

We explore possible effects of a Tobin tax on exchange rate dynamics in a heterogeneous agent model. To assess the impact of the Tobin tax in this framework, we extend the model of De Grauwe and Grimaldi (Eur Econ Rev 50(1):1-33, 2006) by including transaction costs and perform numerical simulations. Motivated by the importance of the market microstructure, we choose to model the market as being cleared by a Walrasian auctioneer. This setting could more closely resemble the two-layered structure of foreign exchanges at daily frequency than a price impact function, which is often adopted in similar studies. We find that the Tobin tax can deliver a moderate reduction of return volatility and kurtosis. In addition, simulations indicate that the Tobin tax reduces the degree of mispricing in the time series, which is primarily achieved by eliminating long-lasting deviations from fundamental value. [ABSTRACT FROM AUTHOR]

The multiplier of public investment has been expected to far exceed 1, owing to the indirect influence of public spending. However, it has been reported that actual multipliers for a real economy are sometimes <1; the reason for this has not been adequately explained in the literature. This study analyzes the influence of inefficient public expenditure on gross domestic product, using both an agent-based model and a theoretical derivation of the equation for the multiplier of public investment, the latter of which is based on our revised version of Morishima's economic linkage table. The use of both of these instruments indicates that gross domestic product decreases with an increase in the inefficiency of public expenditure, which is defined as the ratio of firm subsidies to the government's total expenditure. The multiplier of public investment becomes <1 when the degree of inefficiency is sufficiently large, and the ratio of the firm's investment spending to the total amount of subsidy funding is sufficiently small. A multiplier lower than 1 is thought to appear when the degree of inefficiency in public expenditure is sufficiently large and firms are reluctant to invest; much of the surplus amount of subsidized funds can be deposited into a bank account, thus reducing the money stock in the market. [ABSTRACT FROM AUTHOR]

Classical oligopoly theory has strong analytical foundations but is weak in capturing the operating environment of oligopolists and the available knowledge they have for making decisions, areas in which the management literature is relevant. We use agent-based models to simulate the impact on firm profitability of policies that oligopolists can pursue when setting production levels. We develop an approach to analyzing simulation results that makes use of nonparametric statistical tests, taking advantage of the large amounts of data generated by simulations, and avoiding the assumption of normality that does not necessarily hold. Our results show that in a quantity game, a simple exploration rule, which we call Probe and Adjust, can find either the Cournot equilibrium or the monopoly solution depending on the measure of success chosen by the firms. These results shed light on how tacit collusion can develop within an oligopoly. [ABSTRACT FROM AUTHOR]

In April 2003 the U.S. Federal Energy Regulatory Commission proposed a complicated market design—the Wholesale Power Market Platform ( WPMP)—for common adoption by all US wholesale power markets. Versions of the WPMP have been implemented in New England, New York, the mid-Atlantic states, the Midwest, the Southwest, and California. Strong opposition to the WPMP persists among some industry stakeholders, however, due largely to a perceived lack of adequate performance testing. This study reports on the model development and open-source implementation (in Java) of a computational wholesale power market organized in accordance with core WPMP features and operating over a realistically rendered transmission grid. The traders within this market model are strategic profit-seeking agents whose learning behaviors are based on data from human-subject experiments. Our key experimental focus is the complex interplay among structural conditions, market protocols, and learning behaviors in relation to short-term and longer-term market performance. Findings for a dynamic 5-node transmission grid test case are presented for concrete illustration. [ABSTRACT FROM AUTHOR]