Firm Dynamics Simulation Using Game-theoretic Stochastic Agents

Yuichi Ikeda (), Osamu Kubo () and Yasuhiro Kobayashi
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Yuichi Ikeda: Hitachi Ltd.
Osamu Kubo: Hitachi Ltd.
Yasuhiro Kobayashi: Hitachi Ltd.

A chapter in The Complex Networks of Economic Interactions, 2006, pp 153-162 from Springer

Abstract: Summary Decision-making is a crucial task for the business planning of industrial firms, in order to cope with uncertainties in the business environment. A method of firm dynamics simulation, i.e. the game-theoretic stochastic agent, was developed by applying game theory to a stochastic agent model in order to analyze the uncertain business environment. Each stochastic agent is described by a Langevintype equation with an additional term for rational decision-making. In this paper, the dynamics of firms in computer related industries, which consist of three industrial sectors, i.e. the large scale integrated circuit sector, the personal computer sector, and the liquid crystal display sector, are simulated using the game-theoretic stochastic agents model. Then, the importance of the herding behavior of firms is demonstrated to reproduce the formation and collapse of the bubble in the Japanese computer related industry markets during the late 90s.

Keywords: [83.10.Pp] Particle dynamics; [02.50.Le] Decision theory and game theory; [05.10.Gg] Stochastic analysis methods (Fokker-Planck; Langevin; etc.); [05.10.Ln] Monte Carlo methods; [05.20.-y] Classical statistical mechanics; [05.40.Jc] Brownian motion (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-540-28727-8_10

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DOI: 10.1007/3-540-28727-2_10

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