Economies are complicated systems encompassing micro behaviors, interaction patterns, and global regularities. Whether partial or general in scope, studies of economic systems must consider how to handle difficult real-world aspects such as asymmetric information, imperfect competition, strategic interaction, collective learning, and the possibility of multiple equilibria. Recent advances in analytical and computational tools are permitting new approaches to the quantitative study of these aspects. One such approach is Agent-based Computational Economics (ACE), the computational study of economic processes modeled as (...) dynamic systems of interacting agents. This chapter explores the potential advantages and disadvantages of 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, institutional arrangements, and behavioral dispositions. (shrink)

Now that complex Agent-Based Models and computer simulations spread over economics and social sciences - as in most sciences of complex systems -, epistemological puzzles (re)emerge. We introduce new epistemological concepts so as to show to what extent authors are right when they focus on some empirical, instrumental or conceptual significance of their model or simulation. By distinguishing between models and simulations, between types of models, between types of computer simulations and between types of empiricity obtained through a simulation, (...) section 2 gives the possibility to understand more precisely - and then to justify - the diversity of the epistemological positions presented in section 1. Our final claim is that careful attention to the multiplicity of the denotational powers of symbols at stake in complex models and computer simulations is necessary to determine, in each case, their proper epistemic status and credibility. (shrink)

Scientists and engineers seek to understand how real-world systems work and could work better. Any modeling method devised for such purposes must simplify reality. Ideally, however, the modeling method should be flexible as well as logically rigorous; it should permit model simplifications to be appropriately tailored for the specific purpose at hand. Flexibility and logical rigor have been the two key goals motivating the development of Agent-based Computational Economics (ACE), a completely agent-based modeling method characterized by seven specific modeling (...) principles. This perspective provides an overview of ACE, a brief history of its development, and its role within a broader spectrum of experiment-based modeling methods. (shrink)

Now that complex Agent-Based Models and computer simulations spread over economics and social sciences - as in most sciences of complex systems -, epistemological puzzles (re)emerge. We introduce new epistemological tools so as to show to what precise extent each author is right when he focuses on some empirical, instrumental or conceptual significance of his model or simulation. By distinguishing between models and simulations, between types of models, between types of computer simulations and between types of empiricity, section 2 (...) gives conceptual tools to explain the rationale of the diverse epistemological positions presented in section 1. Finally, we claim that a careful attention to the real multiplicity of denotational powers of symbols at stake and then to the implicit routes of references operated by models and computer simulations is necessary to determine, in each case, the proper epistemic status and credibility of a given model and/or simulation. (shrink)

This article describes the potential impact that free (i.e., open source) software can have on an existing commercial software market. A model for the software market is constructed in terms of autonomous agents, which represent the users, the companies, and the free software providers. The model specifies a reservation price for each user agent and develops a gradient learning strategy for revenue-maximizing company agents. Simulations explore parameters such as the demand distribution, and the relative importance of market share, advertising and (...) random effects in product visibility. Results from the case without free software show a prevalence of monopolies, which is consistent with other studies of high-technology market economics. The effects of free software are not uniform, but are highly parameter dependent. A “capture region” is found in which free software eventually dominates the market. (shrink)

Since Economics survey by Windrum et al., research on empirical validation of agent-based Agent-based model in Economics has made substantial advances, thanks to a constant flow of high-quality contributions. This Chapter attempts to take stock of such recent literature to offer an updated critical review of the existing validation techniques. We sketch a simple theoretical framework that conceptualizes existing validation approaches, which we examine along three different dimensions: Comparison between artificial and real-world Data; Calibration and estimation of model (...) parameters; and parameter space Exploration. Finally, we discuss open issues in the field of ABM validation and Estimation. In particular, we argue that more research efforts should be devoted toward advancing HypothesisTesting in ABM, with specific emphasis on model stationarity and ergodicity. (shrink)

Neoclassical economic theory, which still dominates the science, has proven inadequate to predict financial crises. In an increasingly globalised world, the consequences of that inadequacy are likely to become more severe. This article attributes much of the difficulty to an emphasis on equilibrium as an idealised property of economic systems. Alternatively, this article proposes that actual economies are typically out of balance, and that any equilibrium which may exist is transitory. That single changed assumption is central to complexity economics, (...) a view which is presented in detail. It is suggested that economic crises will be most effectively avoided when economists utilise methods, grounded in complexity theory, which can identify threat in an early stage. As a programmatic example, the use of Agent-Based Models (ABMs) combined with Boolean networks (BNs), is defended as a promising method for recognising vulnerability. (shrink)

The explosive growth in computational power over the past several decades offers new tools and opportunities for economists. This handbook volume surveys recent research on Agent-based Computational Economics (ACE), the computational study of economic processes modeled as open-ended dynamic systems of interacting agents. Empirical referents for “agents” in ACE models can range from individuals or social groups with learning capabilities to physical world features with no cognitive function. Topics covered include: learning; empirical validation; network economics; social dynamics; financial (...) markets; innovation and technological change; organizations; market design; automated markets and trading agents; political economy; social-ecological systems; computational laboratory development; and general methodological issues. (shrink)

This study provides a basic introduction to agent-based modeling (ABM) as a powerful blend of classical and constructive mathematics, with a primary focus on its applicability for social science research. The typical goals of ABM social science researchers are discussed along with the culture-dish nature of their computer experiments. The applicability of ABM for science more generally is also considered, with special attention to physics. Finally, two distinct types of ABM applications are summarized in order to illustrate concretely the duality (...) of ABM: Real-world systems can not only be simulated with verisimilitude using ABM; they can also be efficiently and robustly designed and constructed on the basis of ABM principles. (shrink)

This book brings together contributions from leading researchers in the field of agent-based modelling and simulation. This approach has grown out of some recent and innovative ideas in the social sciences, computer sciences, life sciences, physics and game theory. It is proving helpful in understanding complexity in many domains. The opportunities it offers to explore the experimental approach to social and human behaviour is proving of theoretical and empirical value across a wide range of fields. With contributions from researchers whose (...) work has served to define this new field such as Nigel Gilbert, Robert Axtell (in economics and social science) and Jacques Ferber (in multi-agent systems), as well as practitioners who are working at the cutting edge of the new domain, this collection of essays has been assembled by two of its leading exponents: Frédéric Amblard and Denis Phan. The research, case studies and theoretical approaches discussed in this book are designed to introduce beginners and experts alike to the current state of play in this new and exciting field of social science. (shrink)

The energy domain is still dominated by equilibrium models that underestimate both the dangers and opportunities related to climate change. In reality, climate and energy systems contain tipping points, feedback loops, and exponential developments. This paper describes how to create realistic energy transition management models: quantitative models that can discover profitable pathways from fossil fuels to renewable energy. We review the literature regarding agent-based economics, disruptive innovation, and transition management and determine the following requirements. Actors must be detailed, heterogeneous, (...) interacting, learning, and strategizing. Technology should be represented as a detailed and heterogeneous portfolio that can develop in a bottom-up manner, using endogenous feedback loops. Assumptions about discount rates and the social cost of carbon should be configurable. The model should contain interactions between the global, national, local, and individual level. A review of modelling techniques shows that equilibrium models are unsuitable and that system dynamics and discrete event simulation are too limited. The agent-based approach is found to be uniquely suited for the complex adaptive sociotechnical systems that must be modelled. But the choice for agent-based models does not mean a rejection of other approaches because they can be accommodated within the agent-based framework. We conclude with practical guidelines. (shrink)

This volume brings together contributions from leading researchers in the field of agent-based modelling and simulation. This approach has grown out of some recent and innovative ideas in the social sciences, computer sciences, life sciences, physics and game theory. It is proving helpful in understanding complexity in many domains. The opportunities it offers to explore the experimental approach to social and human behaviour is proving of theoretical and empirical value across a wide range of fields. With contributions from researchers whose (...) work has served to define this new field such as Nigel Gilbert, Robert Axtell (in economics and social science) and Jacques Ferber (in multi-agent systems), as well as practitioners who are working at the cutting edge of the new domain, this collection of essays has been assembled by two of its leading exponents: Frédéric Amblard and Denis Phan. The research, case studies and theoretical approaches discussed in this book are designed to introduce beginners and experts alike to the current state of play in this new and exciting field of social science. (shrink)

This article argues that agent-based modeling is the methodological implication of Lawson’s championed ontological turn in economics. We single out three major properties of agent-based computational economics, namely, autonomous agents, social interactions, and the micro-macro links, which have been well accepted by the ACE community. We then argue that ACE does make a full commitment to the ontology of economics as proposed by Lawson, based on his prompted critical realism. Nevertheless, the article also points out the current (...) limitations or constraints of ACE. Efforts to overcome them are deemed to be crucial before ACE can make itself more promising to the current ontological turn in economics. (shrink)

During the COVID-19 crisis there have been many difficult decisions governments and other decision makers had to make. E.g. do we go for a total lock down or keep schools open? How many people and which people should be tested? Although there are many good models from e.g. epidemiologists on the spread of the virus under certain conditions, these models do not directly translate into the interventions that can be taken by government. Neither can these models contribute to understand the (...) economic and/or social consequences of the interventions. However, effective and sustainable solutions need to take into account this combination of factors. In this paper, we propose an agent-based social simulation tool, ASSOCC, that supports decision makers understand possible consequences of policy interventions, but exploring the combined social, health and economic consequences of these interventions. (shrink)

Agent-Based Models are useful to describe and understand social, economic and spatial systems' dynamics. But, beside the facilities which this methodology offers, evaluation and comparison of simulation models are sometimes problematic. A rigorous conceptual frame needs to be developed. This is in order to ensure the coherence in the chain linking at the one extreme the scientist's hypotheses about the modeled phenomenon and at the other the structure of rules in the computer program. This also systematizes the model design from (...) the thematician conceptual framework as well. The aim is to reflect upon the role that a well defined ontology, based on the crossing of the philosophical and the computer science insights, can play to solve such questions and help the model building. We analyze different conceptions of ontology, introduce the 'ontological test' and show its usefulness to compare models. Then we focus on the model building and show the place of a systematic ABM ontology. The latter process is situated within a larger framework called the 'knowledge framework' in which not only the ontologies but also the notions of theory, model and empirical data take place. At last the relation between emergence and ontology is discussed. (shrink)

This paper is a summary of the research developed in the author’s Ph.D. programme. The case study deals with the implementation of Energy Efficiency policies in the Building sector of the Lazio Region and carries out an ABM analysis of the impacts of training on the social actors involved. Its purpose is to reproduce the social mechanisms through the study of the actors’ actions with ABM in order to evaluate socio-economic impacts by interconnecting the social and economic variables by means (...) of the Social Accounting Matrix. (shrink)

Nicholas Vriend asked whether F.A. Hayek was an “ace,” and answered affirmatively. By “ace,” Vriend meant someone who worked with agent-based modeling. To be sure, Hayek could not have worked with agent-based models because that platform did not exist when Hayek was developing his ideas about the distribution and use of knowledge in society. All the same, Vriend explained convincingly that Hayek could have made good use of the agent-based platform had it been available in the 1930s. To similar effect, (...) we argue in this paper that James Buchanan could have made good use of agent-based modeling to carry forward his ideas about the value of taking an emergent approach to the explanation of economic processes. (shrink)

The use of computer simulation for building theoretical models in social science is introduced. It is proposed that agent-based models have potential as a “third way” of carrying out social science, in addition to argumentation and formalisation. With computer simulations, in contrast to other methods, it is possible to formalise complex theories about processes, carry out experiments and observe the occurrence of emergence. Some suggestions are offered about techniques for building agent-based models and for debugging them. A scheme for structuring (...) a simulation program into agents, the environment and other parts for modifying and observing the agents is described. The article concludes with some references to modelling tools helpful for building computer simulations. (shrink)

Agent-based models derive the behavior of artificial socio-economic entities computationally from the actions of a large number of agents. One objection is that highly idealized ABMs fail to represent the real world in any reasonable sense. Another objection is that they at best show how observed patterns may have come about, because simulations are easy to produce and there is no evidence that this is really what happens. Moreover, different models may well yield the same result. I will rebut these (...) objections by focusing on an often neglected, but crucial function of ABMs. Building on Gelfert’s account of the exploratory uses of scientific models I show that, in the absence of an accepted underlying theory, successful ABMs lend inductive support to assumptions concerning certain structural feutures of the behavioral rules employed. One core step towards this goal is what I call multiple-model robustness analysis. (shrink)

The aim of this paper is to stress some ontological and methodological issues for Agent-Based Model (ABM) building, exploration, and evaluation in the Social and Human Sciences. Two particular domain of interest are to compare ABM and simulations (Model To Model) within a given academic field or across different disciplines and to use ontology for to discuss about the epistemic and methodological consequences of modeling choices. The paper starts with some definitions of ontology in philosophy and computer sciences. The implicit (...) and different ontology which underlies the approach of a same object of interest are discussed in the case of spatial economists and geographers. Finally, using the case of Shelling’s model, we discuss the concept of “ontological test,” and raise the question of the ontological compatibility between the “model world” and the “real world.”. (shrink)

Multi-level institutional designs with distributed power and authority arrangements among federal, state, regional, and local government agencies could lead to the emergence of differential patterns of socioeconomic and infrastructure development pathways in complex social–ecological systems. Both exogenous drivers and endogenous processes in social–ecological systems can lead to changes in the number of “basins of attraction,” changes in the positions of the basins within the state space, and changes in the positions of the thresholds between basins. In an effort to advance (...) the theory and practice of the governance of policy systems, this study addresses a narrower empirical question: how do intergovernmental institutional rules set by federal, state, and regional government agencies generate and sustain basins of attraction in funding infrastructure projects? A pattern-oriented, agent-based model (ABM) of an intergovernmental network has been developed to simulate real-world transportation policy implementation processes across the federal, the state of Vermont, regional, and local governments for prioritizing transportation projects. The ABM simulates baseline and alternative intergovernmental institutional rule structures and assesses their impacts on financial investment flows. The ABM was calibrated with data from multiple focus groups, individual interviews, and analysis of federal, state, and regional scale transportation projects and programs. The results from experimental simulations are presented to test system-wide effects of alternative multi-level institutional designs, in particular different power and authority arrangements between state and regional governments, on the emergence of roadway project prioritization patterns and funding allocations across regions and towns. (shrink)

Despite the urgency of this issue, AI still struggles to represent social life. This article presents a comprehensive agent-based model that investigates status-power dynamics in groups. Kemper’s sociological status–power theory of social relationships, and a literature review on school children in middle youth, is its basis. The model allows us to investigate causation of the near-ubiquitous phenomenon that females have lower social status on average than males. Possible causes included in the model are children’s dispositional traits (kindness, beauty, and physical (...) power), schoolyard culture (social acceptability of fighting), behavioural strategy (amount of rough-and-tumble play) and the balance between public and dyadic sources of status. An agent-based model of a virtual schoolyard was created in which the children assemble in changing groups and mutually confer status. The status conferred upon a child modifies the status it holds. Rough-and-tumble is modelled as ambiguous: it is intended as a status conferral, but may be perceived as a power move. Running many trials of the model we found that in time, depending on the parameter settings, a gender-based status gap emerged. Rough-and-tumble play had more impact on emergent status differences than did physical power differences. Social acceptability of fighting also strongly moderated the resulting status gap. Placing more weight on dyadic relationship could alleviate status loss. All these model behaviours are in line with empirical findings of child behaviour studies at schools. They have face validity for social status issues in the adult world. We conclude from this that this kind of agent-based model merits use in studying the status–power dynamics of other issues in child behaviour, or indeed in social behaviour in general. (shrink)

Critiques of Neoclassical Economics extend, unsurprisingly, to its mathematical structure. The discussion has largely focused on General Equilibrium Theory (GET), a formalism developed by Leon Walras over a century ago. Internally consistent, but highly unrealistic, GET lacks predictive power, and has been a historical failure. As an alternative, this article proposes a methodology largely developed by Grabner et al. (2019), in which Agent-Based Models (ABMs) are linked with existing Equation-Based Models (EBMs) as a means of developing a more powerful (...) formalism. The approach is illustrated by application to the Arrow- Debreu (AD) model of Neoclassical theory, and the Kuznets Curve of Developmental Economics. Broader implications for the social and natural sciences are briefly considered. (shrink)

In this paper, we examine the problems facing a policy maker who observes inconsistent choices made by agents who are boundedly rational. We contrast a model-less and a model-based approach to welfare economics. We make the case for the model-based approach and examine its advantages as well as some problematic issues associated with it.

Les modèles basés sur des agents en interactions, constituent des systèmes sociaux complexes, qui peuvent être simulés par informatiques. Ils se répandent dans les sciences économiques et sociales - comme dans la plupart des sciences des systèmes complexes. Des énigmes épistémologiques (ré)apparaissent. On a souvent opposé modèles et investigations empiriques : d’un côté, on considère les sciences empiriques fondées sur une observation méthodique (enquêtes, expériences) tandis que de l’autre, on conçoit les approches théoriques et la modélisation comme s’appuyant sur une (...) approche conceptuelle ou hypothético-déductive. la simulation a de son coté souvent été comparée à une forme d’expérience ou à une méthode intermédiaire entre la théorie et l’expérience. Tesfatsion a parlé de « laboratoire computationnel » comme d’une manière d’étudier « les comportements des systèmes complexes au moyen d’expériences sous contrôle qu’on peut répéter (réplicable)» et Axelrod a proclamé que la simulation serait « une troisième manière de pratiquer la science dans les sciences sociales », entre l’induction et la déduction. Nous introduisons de nouveaux concepts épistémologiques afin de montrer dans quelle mesure les auteurs ont raison lorsqu'ils se concentrent sur une signification empirique, instrumentale ou conceptuelle de leur modèle ou simulation. La première partie du chapitre discute plus particulièrement de l'épistémologie des modèles économiques à partir des travaux d’Hausman, Guala, Mäki, Sugden, Schelling etc. pour expliquer les divergences entre modèles et simulations. En distinguant entre modèles et simulations, comme entre entre types de modèles, types de simulations informatiques et types d'empiricité obtenue par une simulation, la seconde partie donne la possibilité de comprendre plus précisément - et ensuite de justifier - la diversité des positions épistémologiques présentées dans la première partie. En utilisant les notion de sous-symbolisation (due à Smolensky) et, de hiérarchie dénotationnelle (due à Goodman), une attention particulière est accordée à la multiplicité des pouvoirs dénotationnels des symboles en jeu dans les modèles complexes et les simulations informatiques. Selon cette grille d'analyse, on peut déterminer, dans chaque cas particulier son statut épistémique et la crédibilité qui peut y être associée. -/- Ce chapitre est une traduction (par Gilles Campagnolo) réviséee et augmentée par les auteurs de : Agent-Based Models and Simulations in Economics and Social Sciences: From Conceptual Exploration to Distinct Ways of Experimenting, Journal of Artificial Societies and Social Simulation 13 (1) 5 DOI: 10.18564/jasss.1532. (shrink)

The paper starts by distinguishing between two kinds of economic practice: theoretical economic practice (TEP) (model and theory building) and direct economic practice (DEP) (the practical operation upon real economies). Most of the epistemological and philosophical considerations have been directed to the first type of practice, one of whose main goals is the discovery of particular sorts of economic laws, mechanisms and other regularities which throw light on relevant economic patterns. We do not deny that in some restricted domains these (...) kinds of regularities may be found. Rather, we claim that the realm of economics is best understood as consisting of processes whose regular structure (if they have one at all) is not guaranteed beforehand but may be crucially influenced and successfully enforced by what we call DEP. We claim that (a) some economic processes are a particular type of social process that will be referred to as Expectations-Based Processes (EBP). Characteristically, an EBP shows a connection between the information that individuals receive from the relevant economic context, the expectations they form, and the actions they perform; (b) in those cases in which EBP exhibit a regular behaviour, they depend on agents' expectations and, crucially, we argue, on interventions upon them. Authorities as well as other economic actors may intervene to change agents' expectations (and therefore, their decisions), contributing to shape EBP and helping to produce the patterns that lead to some targeted economic phenomena. These features of EBP show that they are not shielded from external influences and they do not run autonomously once triggered. Therefore they cannot be conceived as mechanisms or as economic machines. Rather they are open-ended processes that require continuous prodding on the part of policy makers to keep them running in the intended way. (shrink)

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, 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. (shrink)

In the present article, I will advocate caution against developing artificial moral agents based on the notion that the utilization of preliminary forms of AMAs will potentially negatively feed back on the human social system and on human moral thought itself and its value—e.g., by reinforcing social inequalities, diminishing the breadth of employed ethical arguments and the value of character. While scientific investigations into AMAs pose no direct significant threat, I will argue against their premature utilization for practical and economical (...) use. I will base my arguments on two thought experiments. The first thought experiment deals with the potential to generate a replica of an individual’s moral stances with the purpose to increase, what I term, ’moral efficiency’. Hence, as a first risk, an unregulated utilization of premature AMAs in a neoliberal capitalist system is likely to disadvantage those who cannot afford ’moral replicas’ and further reinforce social inequalities. The second thought experiment deals with the idea of a ’moral calculator’. As a second risk, I will argue that, even as a device equally accessible to all and aimed at augmenting human moral deliberation, ’moral calculators’ as preliminary forms of AMAs are likely to diminish the breadth and depth of concepts employed in moral arguments. Again, I base this claim on the idea that the current most dominant economic system rewards increases in productivity. However, increases in efficiency will mostly stem from relying on the outputs of ’moral calculators’ without further scrutiny. Premature AMAs will cover only a limited scope of moral argumentation and, hence, over-reliance on them will narrow human moral thought. In addition and as the third risk, I will argue that an increased disregard of the interior of a moral agent may ensue—a trend that can already be observed in the literature. (shrink)

In the 1860s and 1870s the logic of Boole and the calculating machines of Babbage were key resources in W. S. Jevons’s attempt to construct a mechanical model of the mind, and both therefore played an important role in Jevons’s attempted revolution in economic theory. In this same period both Boole and Babbage were studied within the Cambridge Moral Sciences Tripos, but the Cambridge reading of Boole and Babbage was much more circumspect. Implicitly following the division of the moral sciences (...) into material and ‘real’ as established by the Rev. Grote, John Venn treated Boole’s logic as a purely formal science, while Alfred Marshall based his psychological model of the mechanical part of the human mind upon Babbage’s two-level machine. From the different perspectives of logic and psychology, Venn and Marshall did not simply incorporate their readings of Boole and Babbage, but also attempted to establish the limits to any mechanical explanation of the mind. This comparison of the attitudes to mental science of Jevons and Marshall provides a foundation from which the differing conceptions of economic theory of the two men can be established.Keywords: Alfred Marshall; Charles Babbage; George Boole; John Venn; Logic; Psychology. (shrink)

While this article sets out to advance our knowledge about the characteristics of Nigerian cybercriminals (Yahoo-Boys), it is also the first study to explore the narratives of the Economic and Financial Crimes Commission (EFCC) officers concerning them. It appraises symbolic interactionist insights to consider the ways in which contextual factors and worldview may help to illuminate officers’ narratives of cybercriminals and the interpretations and implications of such accounts. Semi-structured interviews of forty frontline EFCC officers formed the empirical basis of this (...) study and were subjected to a directed approach of qualitative content analysis. While prior studies, for example, indicated that only a group of cybercriminals deploy spiritual and magical powers to defraud victims (i.e. modus operandi), our data analysis extended this classification into more refined levels involving multiple features. In particular, analysis bifurcates cybercriminals and their operations based on three factors: [a] educational-attainment, [b] modus-operandi, and [c] networks-collaborators. Results also suggest that these cybercriminals and their operations are embedded in “masculinity-and-material-wealth”. These contributions thus have implications for a range of generally accepted viewpoints about these cybercriminals previously taken-for-granted. Since these criminals have victims all over the world, insights from our study may help various local and international agencies [a] to understand the actions/features of these two groups of cybercriminals better and develop more effective response strategies. [b] to appreciate the vulnerabilities of their victims better and develop more adequate support schemes. We also consider the limitations of social control agents’ narratives on criminals. (shrink)

This paper contributes to the (re-)conceptualisation of responsible innovation by proposing an evolutionary economic approach that focuses on the role of consumers in the innovation process. After a discussion of the philosophical foundations and ethical implications of this approach, which bears an explanatory potential that has not been adequately considered in previous discussions of responsible innovation, we present a first step towards capturing the important but often neglected role of consumers in innovation processes (including responsible innovation): We propose an agent-based (...) model that incorporates a multidimensional space of characteristics in which new products or services are represented by more than the mere aspect of price and quality. Instead, innovations are denoted by a large set of characteristics, including also negative or harmful ones. The model is used to illustrate that consumers’ heterogeneity and bounded rationality – even if considered in a simple manner – indeed play a crucial role in the creation and diffusion of responsible innovation which can and should be used for further work in this field and for possible extensions of the model. (shrink)

The book contains thirty original articles dealing with important aspects of theoretical as well as applied economic theory. While the principal focus is on: the computational and algorithmic nature of economic dynamics; individual as well as collective decision process and rational behavior, some contributions emphasize also the importance of classical recursion theory and constructive mathematics for dynamical systems, business cycles theories, growth theories, and others are in the area of history of thought, methodology and behavioural economics. The contributors range (...) from Nobel Laureates to the promising new generation of innovative thinkers. This volume is also a Festschrift in honour of Professor Kumaraswamy Vela Velupillai, the founder of Computable Economics, a growing field of research where important results stemming from classical recursion theory and constructive mathematics are applied to economic theory. The aim and hope is to provide new tools for economic modelling. This book will be of particular appeal to postgraduate students and scholars in one or more of the following fields: computable economics, business cycles, macroeconomics, growth theories, methodology, behavioural economics, financial economics, experimental and agent based economics. It might be also of importance to those interested on the general theme of algorithmic foundations for social sciences. (shrink)

The economic crisis is also a crisis for economic theory. Most analyses of the evolution of the crisis invoke three themes, contagion, networks and trust, yet none of these play a major role in standard macroeconomic models. What is needed is a theory in which these aspects are central. The direct interaction between individuals, firms and banks does not simply produce imperfections in the functioning of the economy but is the very basis of the functioning of a modern economy. This (...) book suggests a way of analysing the economy which takes this point of view. The economy should be considered as a complex adaptive system in which the agents constantly react to, influence and are influenced by, the other individuals in the economy. In such systems which are familiar from statistical physics and biology for example, the behaviour of the aggregate cannot be deduced from the behaviour of the average, or "representative" individual. Just as the organised activity of an ants’ nest cannot be understood from the behaviour of a "representative ant" so macroeconomic phenomena should not be assimilated to those associated with the "representative agent". This book provides examples where this can clearly be seen. The examples range from Schelling’s model of segregation, to contributions to public goods, the evolution of buyer seller relations in fish markets, to financial models based on the foraging behaviour of ants. The message of the book is that coordination rather than efficiency is the central problem in economics. How do the myriads of individual choices and decisions come to be coordinated? How does the economy or a market, "self organise" and how does this sometimes result in major upheavals, or to use the phrase from physics, "phase transitions"? The sort of system described in this book is not in equilibrium in the standard sense, it is constantly changing and moving from state to state and its very structure is always being modified. The economy is not a ship sailing on a well-defined trajectory which occasionally gets knocked off course. It is more like the slime described in the book "emergence", constantly reorganising itself so as to slide collectively in directions which are neither understood nor necessarily desired by its components. (shrink)

The origins of both economic and philosophical value theory are examined and shown to be closely related. The status of neo-classical value theory is that it is internally flawed in any attempt to describe the real world. Cost-benefit analysis as it applies to the valuation of environmental agents relies upon the claim that this neo-classical theory has a particular status in optimal welfare maximisation and, therefore, suffers the same problems of internal consistency. Economic valuation of the environment is not a (...) scientific process derived from external law but a social process relying upon social agreement. Alternatives to economic valuation are considered and may possess a more plausible social base. However, all environmental valuation is at odds with beliefs based upon the existence of objective and intrinsic values. (shrink)

“Agent-centered” approaches to global poverty insist that effective arguments for poverty reduction must specify the concrete duties of particular duty-bearers. This article takes up a recent, influential, version of this view, Thomas Pogge’s human rights-based argument for global economic reforms to reduce chronic deprivation. While signaling a welcome shift from the diffuse allocation of responsibilities common to much philosophical writing on poverty, I argue that Pogge’s approach too readily assigns to powerful institutions in the global North the role of devising (...) and directing anti-poverty initiatives. In so doing, he overlooks the agency—actual and potential—of the poor themselves, as evidenced by poor-led political movements and poor-centered, participatory models of poverty reduction in development theory and practice. While agent-oriented approaches are right to focus our attention on structures that cause poverty, they ought not to assume that the powerful agents responsible for these are the only—or most appropriate—agents to lead the way to poverty reduction. Just as development organizations working in the global South have come to recognize that the participation of poor communities is critical to the success of development strategies, so should normative theorists writing about global injustice acknowledge the importance of the poor as active agents in poverty reduction efforts. (shrink)

“Agent-centered” approaches to global poverty insist that effective arguments for poverty reduction must specify the concrete duties of particular duty-bearers. This article takes up a recent, influential, version of this view, Thomas Pogge’s human rights-based argument for global economic reforms to reduce chronic deprivation. While signaling a welcome shift from the diffuse allocation of responsibilities common to much philosophical writing on poverty, I argue that Pogge’s approach too readily assigns to powerful institutions in the global North the role of devising (...) and directing anti-poverty initiatives. In so doing, he overlooks the agency—actual and potential—of the poor themselves, as evidenced by poor-led political movements and poor-centered, participatory models of poverty reduction in development theory and practice. While agent-oriented approaches are right to focus our attention on structures that cause poverty, they ought not to assume that the powerful agents responsible for these are the only—or most appropriate—agents to lead the way to poverty reduction. Just as development organizations working in the global South have come to recognize that the participation of poor communities is critical to the success of development strategies, so should normative theorists writing about global injustice acknowledge the importance of the poor as active agents in poverty reduction efforts. (shrink)

“Agent-centered” approaches to global poverty insist that effective arguments for poverty reduction must specify the concrete duties of particular duty-bearers. This article takes up a recent, influential, version of this view, Thomas Pogge’s human rights-based argument for global economic reforms to reduce chronic deprivation. While signaling a welcome shift from the diffuse allocation of responsibilities common to much philosophical writing on poverty, I argue that Pogge’s approach too readily assigns to powerful institutions in the global North the role of devising (...) and directing anti-poverty initiatives. In so doing, he overlooks the agency—actual and potential—of the poor themselves, as evidenced by poor-led political movements and poor-centered, participatory models of poverty reduction in development theory and practice. While agent-oriented approaches are right to focus our attention on structures that cause poverty, they ought not to assume that the powerful agents responsible for these are the only—or most appropriate—agents to lead the way to poverty reduction. Just as development organizations working in the global South have come to recognize that the participation of poor communities is critical to the success of development strategies, so should normative theorists writing about global injustice acknowledge the importance of the poor as active agents in poverty reduction efforts. (shrink)

The term neoclassical economics delineates a distinct and relatively homogenous school of thought in economic theory that became prominent in the late nineteenth century and that now dominates mainstream economics. The term was originally introduced by Thorstein Veblen to describe developments in the discipline (of which Veblen did not entirely approve) associated with the work of such figures as William Jevons, Carl Menger, and Leon Walras. The ambition of these figures, the first neoclassicists, was to formalize and mathematize (...) the subject in the aftermath of the so-called marginalist revolution. Economics is, according to one definition, the science that studies human behavior as a relationship between ends and scarce means that have alternative uses. Neoclassical economics pursues this study by means of supply and demand models that determine prices based on the subjective preferences of producers and consumers. Neoclassical economics relies on subjective preferences for determining prices in order to escape from the so-called objective value theory of classical economics, according to which the value of goods could be established by reference to some basic commodity (usually corn) or the labor input required to produce a good. Neoclassicists hoped that by jettisoning objective value, economics could be placed on a more scientific basis as an essentially descriptive and predictive theory of human behavior. Political theory, by contrast, involves both positive and normative elements. It is a positive science to the extent to which it aims to describe and predict political behavior. It is a normative science to the extent to which it prescribes how agents should behave in the political arena and what the best political institutions are. Neoclassical economics is relevant to both of these elements. (shrink)

Strategies for improving the explainability of artificial agents are a key approach to support the understandability of artificial agents’ decision-making processes and their trustworthiness. However, since explanations are not inclined to standardization, finding solutions that fit the algorithmic-based decision-making processes of artificial agents poses a compelling challenge. This paper addresses the concept of trust in relation to complementary aspects that play a role in interpersonal and human–agent relationships, such as users’ confidence and their perception of artificial agents’ reliability. Particularly, this (...) paper focuses on non-expert users’ perspectives, since users with little technical knowledge are likely to benefit the most from “post-hoc”, everyday explanations. Drawing upon the explainable AI and social sciences literature, this paper investigates how artificial agent’s explainability and trust are interrelated at different stages of an interaction. Specifically, the possibility of implementing explainability as a trust building, trust maintenance and restoration strategy is investigated. To this extent, the paper identifies and discusses the intrinsic limits and fundamental features of explanations, such as structural qualities and communication strategies. Accordingly, this paper contributes to the debate by providing recommendations on how to maximize the effectiveness of explanations for supporting non-expert users’ understanding and trust. (shrink)

Economic geographers increasingly consider the significance of history in shaping the contemporary socio-economic landscape and believe that experiences and competencies, acquired over time by individuals and entities in particular localities, to a large degree determine present configurations as well as future regional trajectories. Attempts to trace, understand, and investigate the pathways from past to present have given rise to the thriving and exciting sub-field of Evolutionary Economic Geography. EEG highlights the important factors that initiate, inhibit, or consolidate the contextual settings (...) and relationships in which regions and their respective agents, which comprise and shape economic activity and social reproduction, change over time. It has at its core the production and destruction of novelty in space, and the links between innovation and regional economic fortunes. The creation of knowledge, its movement and recombination within different regional ensembles of economic agents and institutions plays a critical role in the evolution of the space-economy. EEG provides a framework to disentangle the complexity of technological change and regional economic development based on a variety of theoretical and methodological approaches. In only a short time, EEG has established itself as a promising and rapidly evolving research framework with its focus on the driving forces of regional development across various scales and its attempt to translate findings into public policy. This book advances the theoretical foundations of EEG, and demonstrates how EEG utilises and operationalises conceptual frameworks, both established and new. Contributions also point to future research avenues and extensions of EEG, attempting to build stronger ties between theory, empirical evidence, and relevance to policy. This book was originally published as a special issue of _Regional Studies. _. (shrink)

This article analyzes the question of how the size of bribes should impact criminal sanctions. In contrast to the commonly held view that punishment should increase with the size of the bribe, we argue to the contrary: that the punishment of the bribee should decrease with the size of the bribe. Our conclusion is based both on a philosophical argument and an economic argument. We argue that all else being equal, as an agent’s reservation price for selling public interests decreases, (...) the culpability of the agent willing to receive a bribe increases. In addition, from an economic perspective, the expected social harm of an official acting with a low reservation price for bribes is much greater than one acting with a high reservation price: both the susceptibility of being bribed as well as the potential for social harm is much greater when the reservation price is low. (shrink)

Pathological gambling (PG) is a kind of ‘ideal puzzle’ for the economic model of the consumer. The pathological gambler takes pains to engage in activity that transparently has negative expected returns if utility varies positively with money. She also, typically, spends further resources on commitment devices designed to interfere with her gambling. These properties together describe an agent that is a kind of perfect foil for the rationally maximizing consumer. Recently, aspects of the neuropathology underlying the strange economic agency of (...) the pathological gambler are becoming understood. Thus PG is an ideal test bed phenomenon for working out relationships between economic modeling based on constrained optimization of utility and the new neuroscience of behavior. (shrink)

The phenomenon of performativity has recently sparked debates about the status of the economic discourse. This paper aims to discuss the subjectivist idea that if economics ‘performs’ social reality, rather than merely reflects it, then every theory can be considered ‘true.’ My main goal is to point out three limits of performativity. First, not all theories can be performative since some do not produce empirical landmarks for agents. Second, social institutions restrict performativity. Third, I emphasize the necessity that a (...) theory to be self-fulfilling. This article is a prelude to a new kind of performative studies based on an original definition: a theory performs the world if it implies a behavioral regularity which leads to a general coordination between agents. That is to say, if it becomes a convention à la David Lewis. (shrink)

As artificial intelligence (AI) continues to proliferate into every area of modern life, there is no doubt that society has to think deeply about the potential impact, whether negative or positive, that it will have. Whilst scholars recognise that AI can usher in a new era of personal, social and economic prosperity, they also warn of the potential for it to be misused towards the detriment of society. Deliberate strategies are therefore required to ensure that AI can be safely integrated (...) into society in a manner that would maximise the good for as many people as possible, whilst minimising the bad. One of the most urgent societal expectations of artificial agents is the need for them to behave in a manner that is morally relevant, i.e. to become artificial moral agents (AMAs). In this article, I will argue that exemplarism, an ethical theory based on virtue ethics, can be employed in the building of computationally rational AMAs with weak machine ethics. I further argue that three features of exemplarism, namely grounding in moral exemplars, meeting community expectations and practical simplicity, are crucial to its uniqueness and suitability for application in building AMAs that fit the ethos of AI4SG. (shrink)

This paper presents the benefits they can obtain business which aim to protect the environment. The environment protection has found its place and affects the process of systemic change of the Polish economy. This article assumes that building a competitive economy and enterprise development based on the principle of sustainable development requires the development of mechanisms for mutual benefits. These will be the economic mechanisms, technical and technological, and social. All these mechanisms are concentrated in clusters. Pursue sustainable development policies, (...) an emphasis on environmental protection will be the general element for them a competitive advantage. Sustainable development will in this case be both the agent and the goal of economic and entrepreneurship development. Basing on the assumption that economic development is possible through the achievement of competitive advantage, sustainable development should be treated as its source. (shrink)

Virtue ethics has many times been suggested as a promising recipe for the construction of artificial moral agents due to its emphasis on moral character and learning. However, given the complex nature of the theory, hardly any work has de facto attempted to implement the core tenets of virtue ethics in moral machines. The main goal of this paper is to demonstrate how virtue ethics can be taken all the way from theory to machine implementation. To achieve this goal, we (...) critically explore the possibilities and challenges for virtue ethics from a computational perspective. Drawing on previous conceptual and technical work, we outline a version of artificial virtue based on moral functionalism, connectionist bottom–up learning, and eudaimonic reward. We then describe how core features of the outlined theory can be interpreted in terms of functionality, which in turn informs the design of components necessary for virtuous cognition. Finally, we present a comprehensive framework for the technical development of artificial virtuous agents and discuss how they can be implemented in moral environments. (shrink)

In recent years, there has been an increasing interest in the development of well-founded conceptual models for Service Management, Accounting Information Systems and Financial Reporting. Economic ex- changes are a central notion in these areas and they occupy a prominent position in frameworks such as the Resource-Event Action (REA) ISO Standard, service core ontologies (e.g., UFO-S) as well as financial stan- dards (e.g. OMG’s Financial Industry Business Ontology - FIBO). We present a core ontology for economic exchanges inspired by a (...) recent view on this phenomenon. According to this view, economic exchanges are based on an agreement on the actions that the agents are committed to perform. This view enables a unified treatment of economic exchanges, regardless the object of the transaction. We ground our core ontology on the Unified Foundational Ontology (UFO), discussing its formal and conceptual aspects, instantiating it as a reusable OntoUML model, and confronting it with the REA standard and the UFO-S service ontology. (shrink)

Kahneman's theory of two systems assumes that human decision making in Economy is based on two cognitive systems, one that is automatic, intuitive and mostly unconscious, and one that is reflexive, rational and fully conscious. The authors consider Kahneman’s approach incomplete and limited in accounting for the creativity of embodied agents grasping the opportunities afforded by physical and social environments. This limitation leads us to argue for the existence of a third system in decision making in Economy, the creative intuition (...) based on direct perception of affordances, addressing not only the dispositions and goals of agents but also the social and environmental responsibility of corporations and governments. The authors argue that the third decision-making system the authors propose implies a concept of intuition that is different from the type of association process discussed by Morewedge and Kahneman [2] and gives an example of the third system operation, the Bolsa Família in Brazil, and finding new options for the funding of similar programs. (shrink)