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Credibly representing category-of-goods mental accounting in an intertemporal optimisation framework is notoriously difficult, as this modelling approach imposes interrelations between the demand for different categories through first-order conditions. This breaks the principle of nonfungibility, contrary to the rationale of mental-accounting theory. Proofs that using intertemporal optimisation is futile in modelling this kind of behaviour are provided, and an alternative is developed: a procedural-behavioural merger of mental accounting and categorisation theories. The merger is necessary to enhance mental-accounting theory, which by itself does not inform about how mental budgets are formed, what they include and how money is spent from various accounts. A classification of six basic consumer types was devised, basing on the differences between their mental-accounting systems and variations of changes of expenditure in response to fluctuations of net disposable income and other possible stimuli. Representing the consumer problem as a behavioural procedure including spending on nondurable and frequently-bought durable goods as well as decisions whether or not to purchase very expensive durable goods, such as houses and flats, allows to model real-world features such as infrequent purchases and rare debt-taking. The devised working-life cycle models of consumer behaviour are consistent with microeconomic evidence on consumption, including those features that are not accounted for by various versions of the permanent income or buffer-stock models. [ABSTRACT FROM AUTHOR]

This paper provides the first steps towards a theoretical and structural modelling framework through which optimal decision making in financial market infrastructures such as payments clearing and settlement systems can be assessed from a market microstructure perspective. In particular, the paper focuses on the application of agent-based computational economics and stochastic games in modelling the bilateral credit limit establishing behaviour of Participants in loss sharing arrangements within financial market infrastructures such as the Canadian Large Value Payments System (LVTS). With specific focus on the LVTS, the paper presents a structural model where the payments system represents a market in which bilateral credit limits are the pricing mechanisms for intraday liquidity provisioning and the credit risk arising from the loss sharing arrangement. The data-driven stochastic game framework further illustrates how payments data, in conjunction with other financial market and credit data, can be used to assess emergent macroscopic outcomes in clearing and settlement systems from the underpinning interactions of autonomous decision making agents. The paper speaks to potential policy issues such as the effectiveness of policy levers such as the System-Wide Percentage, regulatory concerns around procyclicality and free-riding arising from the market microstructure behaviours, and design of the System.

Despite the growing interest in basic income (BI) in recent years, the existing research has mainly focused on its impact on household finances. However, changes in household behavior may affect the actions of other decision makers, such as businesses and governments, leading to unanticipated outcomes. Therefore, any analysis of BI must use a model with multilayered feedback from the actions of individual decision makers. To actualize such a model, household budgets, firms, and other entities must autonomously determine production levels, prices, and other factors, thereby encompassing a complete circulation of funds. This study constructs a macroeconomic model using agent-based modeling as a basic framework to achieve these goals, and it analyzes the emergent behaviors generated by BI and the labor supply in the economic system. The results show that although BI brings about more equitable consumption by households, it also creates a unique phenomenon wherein Gross Domestic Product increases but economic activity in terms of capital investment stagnates. Upon examining the impact of BI, the results of this study present the need to examine the multilayered feedback influencing mutual decision makers, which arises from the behavioral changes of individual decision makers caused by BI. [ABSTRACT FROM AUTHOR]

The hidden-action model provides an optimal sharing rule for situations in which a principal assigns a task to an agent who makes an effort to carry out the task assigned to him. However, the principal can only observe the task outcome but not the agent's actual action, which is why the sharing rule can only be based on the outcome. The hidden-action model builds on somewhat idealized assumptions about the principal's and the agent's capabilities related to information access. We propose an agent-based model that relaxes some of these assumptions. Our analysis lays particular focus on the micro-level dynamics triggered by limited access to information. For the principal's sphere, we identify the so-called Sisyphus effect that explains why the sharing rule that provides the agent with incentives to take optimal action is difficult to achieve if the information is limited, and we identify factors that moderate this effect. In addition, we analyze the behavioral dynamics in the agent's sphere. We show that the agent might make even more of an effort than optimal under unlimited access to information, which we refer to as excess effort. Interestingly, the principal can control the probability of making an excess effort via the incentive mechanism. However, how much excess effort the agent finally makes is out of the principal's direct control. [ABSTRACT FROM AUTHOR]

Despite the growing interest in basic income (BI) in recent years, the existing research has mainly focused on its impact on household finances. However, changes in household behavior may affect the actions of other decision makers, such as businesses and governments, leading to unanticipated outcomes. Therefore, any analysis of BI must use a model with multilayered feedback from the actions of individual decision makers. To actualize such a model, household budgets, firms, and other entities must autonomously determine production levels, prices, and other factors, thereby encompassing a complete circulation of funds. This study constructs a macroeconomic model using agent-based modeling as a basic framework to achieve these goals, and it analyzes the emergent behaviors generated by BI and the labor supply in the economic system. The results show that although BI brings about more equitable consumption by households, it also creates a unique phenomenon wherein Gross Domestic Product increases but economic activity in terms of capital investment stagnates. Upon examining the impact of BI, the results of this study present the need to examine the multilayered feedback influencing mutual decision makers, which arises from the behavioral changes of individual decision makers caused by BI.

The French public and commercial stakeholders need prospective tools to follow how mineral substances criticality change in the French market. After arguing that such tools should necessarily tackle criticality at a complex level, in particular on multiple scales (e.g., France and the EU), we present the first thematic and methodological discussions of our results from the ongoing design of a methodologically based simulation model on two subfields of artificial intelligence: agent-based computational economics (ACE) and machine learning (ML). In applying this to cobalt, our model aims to assess a supply shortage in France for prospective purposes. More precisely, we model a first individual agent (which is already complex by itself) acting at a country level: France. This model is not yet an ACE model per se since only one agent is designed. Nonetheless, we include ACE in the discussions since the work is a premise of such an end. The discussions also include how well the field accepts the methodology. At a thematic level, our preliminary prospective conclusion is a French cobalt supply shortage, should the case arise, would not be due to the variation of price from the UK, the transit leader of cobalt export to France. At a methodological level, we think the idea of methodologically coupling ML and ACE is necessary. ML is well-known in this field, but mainly for the study of mineral prospectivity in mining. Conversely, ACE covers the value chain but is not yet well known in the field and as such is still not trusted. [ABSTRACT FROM AUTHOR]

This paper provides theoretical evidence about financial distress in the business sector in relation to firms' targeted free cash flow (FCF). An agent‐based model of a pure market economy is designed so that a population of firms interact with one another and with a bank. The model determines the interfirm payment network arising from supplier–customer relationships on the basis of a random graph with uniform attachment mechanisms. The interfirm payment network shapes both the liquidity available to each firm and the debts firms incur to finance these payments. Eventually, firms might not have sufficient liquidity to meet their debt requirements, hence their financial distress. Firms that target higher FCFs must reduce their payments to suppliers for the same amount of payments they expect to receive from customers. This influences the interfirm payment network and, therefore, firms' financial distress. On this basis, computational experiments introduce variations in FCF targets. The lowest FCF targets lead to the lowest levels of financial distress in the business sector. Our simplified case of interactions opens the way for further research that employs more complex agent‐based models. [ABSTRACT FROM AUTHOR]

Supplier evaluation and selection problem is among the most important of logistics decisions that have been addressed extensively in supply chain management. The same logistics decision is also important in freight transportation since it identifies trade relationships between business establishments and determines commodity flows between production and consumption points. The commodity flows are then used as input to freight transportation models to determine cargo movements and their characteristics including mode choice and shipment size. Various approaches have been proposed to explore this latter problem in previous studies. Traditionally, potential suppliers are evaluated and selected using only price/cost as the influential criteria and the state-of-practice methods. This paper introduces a hybrid agent-based computational economics and optimization approach for supplier selection. The proposed model combines an agent-based multi-criteria supplier evaluation approach with a multi-objective optimization model to capture both behavioral and economical aspects of the supplier selection process. The model uses a system of ordered response models to determine importance weights of the different criteria in supplier evaluation from a buyers’ point of view. The estimated weights are then used to calculate a utility for each potential supplier in the market and rank them. The calculated utilities are then entered into a mathematical programming model in which best suppliers are selected by maximizing the total accrued utility for all buyers and minimizing total shipping costs while balancing the capacity of potential suppliers to ensure market clearing mechanisms. The proposed model, herein, was implemented under an operational agent-based supply chain and freight transportation framework for the Chicago Metropolitan Area.

Physician emigration can either function as an escape valve to help the health labour market clear from a supply surplus, or aggravate the problem further in case of a shortage. Either way, policy-makers should be particularly aware and devise policies to minimize the occurrence of an imbalance in the physician workforce, which may require physician retention policies if barriers to entry and other market rigidities can not be removed. To this purpose we have developed an agent-based computational economics model to analyse physician emigration, and have used it to study the impact of potential short- and long-term retention policies. As a real case study we have calibrated it with data from Portugal, which features a very particular health system with many rigidities. Results show that all policies are capable of increasing the workforce size, but not all reduce emigration. Also, the effect of return migration is non-negligible, and may substantially offset the impact on the workforce size. Furthermore, the welfare impact of the policies varies considerably. Whether policies to retain physicians should be enacted or whether policy makers should let physicians go will depend on the type of imbalance present in the health system. [ABSTRACT FROM AUTHOR]

In recent years, many studies on financial markets have relied on artificial agents, whether for the evaluation of strategies, the study of price dynamics or the efficient execution of orders. The behaviours used in those studies, often Zero-Intelligence Traders, fundamentalists or chartists, are stochastic and therefore non-deterministic, mainly because such agents easily yield a market that continuously fixes prices. We argue here that a rational and fully deterministic behaviour is sufficient both to reproduce the classic stylized facts of the field, but also to ensure that agents with different initial parameters have different opportunities to enrich themselves. To illustrate this purpose, we introduce Deterministic Artificial Traders, or DAT, and we show their performances in several situations. This result illustrates the fact that financial markets are a complex system, as some deterministic behaviours lead to some randomness in the market, both at the macroscopic and microscopic levels. • It is possible to set prices with fully deterministic agents. • With such agents the stylized facts of the domain are respected. • Despite their determinism, randomness is observed at all levels of the market. • This work illustrates that markets constitute a complex system. [ABSTRACT FROM AUTHOR]

• The agent-based model is used to study the effects of demand's preferences, firms' innovation activities, and financial constraints on innovation projects. • The focus is on the role of green finance in the promotion of green investments. • The subsidiarity principle is explicitly considered in the modeling of a collab- orative private-public financial sector. • Green finance coupled with strong consumers' environmental quality prefer- ences leads to a more pronounced diffusion of green innovations. • Higher and faster GDP growth is achieved when a green-oriented state invest- ment bank is included in the model. The implementation of climate adaptation and mitigation policies depend on the development of green technologies whose diffusion is constrained by a number of barriers which prevent them to spread broadly and at a fast pace. By means of an agent-based computational model, the paper investigates the macro and micro economic dynamics considering the role of a "traditional" commercial bank and a state investment bank that explicitly supports green investments. Simulation results emphasize that green finance matter and that the market diffusion of environmental innovation is more pronounced when the presence of the public investment bank is combined with strong consumers' preferences oriented towards environmental quality. The relevance of the paper is twofold. Besides contributing to the literature on the finance-innovation nexus by considering the role of climate finance within a complex systems framework, it provides a model that can be used as a tool to explore policies to foster environmental innovation diffusion. [ABSTRACT FROM AUTHOR]

La economía artificial es uno de los métodos o enfoques de investigación para el estudio de sistemas socioeconómicos complejos con mayor crecimiento durante los últimos años. Este artículo presenta una visión crítica sobre sus características, su potencial y los riesgos relativos al uso de esta metodología. Para ello, encontramos útil relacionar y comparar a la economía artificial con la economía teórica más tradicional. Desde nuestro análisis, la economía teórica y la economía artificial comparten los mismos objetivos, presentan menos diferencias metodológicas de las que a primera vista pudiera parecer, y sus aproximaciones son sin duda complementarias. ------------------------------------ Artificial Economics is one of the fastest growing approaches to analyse complex socio-economic systems. In this paper we present our views on the distinguishing features of Artificial Economics and on its relation with Theoretical Economics — the field that in our opinion lies closest to Artificial Economics. In this context, we discuss various reasons why conducting research on Artificial Economics may be worthwhile, and provide general guidelines on how to go about it. Our view is that Artificial Economics and Theoretical Economics share the same goals, do not differ conceptually as much as it is sometimes perceived, and their approaches are certainly complementary.

We study mechanisms leading to wealth condensation. As a natural starting point, our model adopts a neoclassical point of view, i.e., we completely ignore work, production, and productive relations, and focus only on bilateral link between two randomly selected agents. We propose a simple matching process with deterministic trading rules and random selection of trading agents. Furthermore, we also neglect the internal characteristic of traded goods and analyse only the relative wealth changes of each agent. This is often the case in financial markets, where a traded good is money itself in various forms and various maturities. We assume that agents trade according to the rules of utility and decision theories. Agents possess incomplete knowledge about market conditions, but the market is in equilibrium. We show that these relatively frugal assumptions naturally lead to a wealth condensation. Moreover, we discuss the role of wealth redistribution in such a model.

Abstract: Agent‐based computational economics (ACE) has been used for tackling major research questions in macroeconomics for at least two decades. This growing field positions itself as an alternative to dynamic stochastic general equilibrium (DSGE) models. In this paper, we provide a much needed review and synthesis of this literature and recent attempts to incorporate insights from ACE into DSGE models. We first review the arguments raised against DSGE in the macroeconomic ACE (macro ACE) literature, and then review existing macro ACE models, their explanatory power and empirical performance. We then turn to the literature on behavioural New Keynesian models that attempts to synthesize these two approaches to macroeconomic modelling by incorporating insights of ACE into DSGE modelling. Finally, we provide a thorough description of the internally rational New Keynesian model, and discuss how this promising line of research can progress. [ABSTRACT FROM AUTHOR]

This paper presents the approach used to implement a simulation model of an artificial economy by using agent-based modeling. The work starts by investigating the use of agent-based methods in economy and the different solutions given by other developers. Then it continues by describing the analysis and design of the artificial economy model, and later it shows the implementation steps taken to build this simulation on the Repast Framework. [ABSTRACT FROM AUTHOR]

This paper uses agent-based modeling to investigate the philosophy of Adam Smith. During his lifetime, Smith published two books. In An Inquiry into the Nature and Causes of the Wealth of Nations (1776), he argued that market behavior was dictated primarily by self-interest. However, his earlier book, The Theory of Moral Sentiments (1759), placed sympathy and benevolence at the center of human social psychology. Reconciling these apparently contradictory views is known as the Adam Smith Problem. This study uses an agent-based model to combine Smith's theories, exploring how social norms affect economic behavior, and vice versa. Although they share many basic assumptions, Smith's works leave important questions unanswered: Theory of Moral Sentiments offers a strong model of how social norms consolidate but lacks a coherent explanation for how norms change over time, and, on the other side, Wealth of Nations does not account for the influence of social norms on commercial transactions nor for the durability of seemingly irrational norms in a context of market competition. Considering both theories together in a single model sheds light on their underlying tensions and exposes instabilities that Smith did not anticipate. [ABSTRACT FROM AUTHOR]