Agent-Based Models in Economics A Toolkit

In contrast to mainstream economics, complexity theory conceives the economy as a complex system of heterogeneous interacting agents characterised by limited information and bounded rationality. Agent Based Models (ABMs) are the analytical and computational tools developed by the proponents of this emerging methodology. Aimed at students and scholars of contemporary economics, this book includes a comprehensive toolkit for agent-based computational economics, now quickly becoming the new way to study evolving economic systems. Leading scholars in the field explain how ABMs can be applied fruitfully to many real-world economic examples and represent a great advancement over mainstream approaches. The essays discuss the methodological bases of agent-based approaches and demonstrate step-by-step how to build, simulate and analyse ABMs and how to validate their outputs empirically using the data. They also present a wide set of applications of these models to key economic topics, including the business cycle, labour markets, and economic growth.

1. Introduction; 2. Agent-based computational economics: what, why, when; 3. Agent-based models as recursive systems; 4. Rationality, behaviour and expectations; 5. Agents' behaviour and learning; 6. Interaction; 7. The agent-based experiment; 8. Empirical validation of agent-based models; 9. Estimation of agent-based models; 10. Epilogue.

Edited by several of the leading figures in the field, this is the first book to provide a state-of-the-art, accessibly written methodological introduction to the tools and techniques of agent-based modelling. Using these building blocks, readers will learn how to design, simulate, and validate agent-based models in economics.

Domenico Delli Gatti is Economics Professor at Università Cattolica del Sacro Cuore, Milano, Department of Economics and Finance. He is Director of the Complexity Lab in Economics. His research interests focus on the role of financial factors (firms' and banks' financial fragility) in business fluctuations. Together with Mauro Gallegati he has provided important contributions to agent based macroeconomics in the book Macroeconomics from the Bottom Up (2013). He has published extensively in high ranking journals and is editor of the Journal of Economic Interaction and Coordination.
Giorgio Fagiolo is Professor of Economics at the Institute of Economics, Scuola Superiore Sant'Anna, Pisa. His research interests include agent-based computational economics; empirics and theory of economic networks; and the statistical properties of microeconomic and macroeconomic dynamics. His papers have been published in numerous journals including Science, the Journal of Economic Geography, and the Journal of Applied Econometrics.
Mauro Gallegati is Professor of Economics at the Università Politecnica delle Marche, Ancona, and he has been a visiting professor in several Universities, including Stanford University, Massachusetts Institute of Technology and Columbia University. He has published journal papers in numerous subject areas including agent based economics, complexity, economic history, nonlinear mathematics, and econophysics, and he sits on the editorial board of several economic journals and book series.
Matteo Richiardi is Senior Research Officer at the Institute for New Economic Thinking, Martin Oxford School, University of Oxford; an assistant professor at the Università degli Studi di Torino, Italy, an associate member of Nuffield College, Oxford; and an affiliate of Collegio Carlo Alberto, Torino. An internationally recognised scholar in both agent-based and dynamic microsimulation modelling, he has also worked as a consultant on labour market policies for the World Bank. He is Chief Editor of the International Journal of Microsimulation, and project leader of JAS-mine, an open source simulation platform for discrete event simulations (www.jas-mine.net).
Alberto Russo is Assistant Professor of Economics at the Università Politecnica delle Marche, Ancona. His research interests include agent based modelling and complexity economics, inequality and macroeconomic dynamics, and financial fragility and systemic risk. He has published in such recognized journals as International Journal of Forecasting, the Journal of Economic Behaviour and Organization, and the Journal of Economic Dynamics and Control. He also serves as guest editor and referee for several international journals.