Heterogeneous Agents with Local Social Influence Networks: Path Dependence and Plurality of Equilibria in the ACE Noiseless Case

Denis Phan ()

Chapter 13 in Artificial Markets Modeling, 2007, pp 181-194 from Springer

Abstract: Abstract In this paper we explore numerically by means of ACE the impact of local social influence on binary choices. The basic model of binary choices with externality presented here (the “GNP model”) is based on Gordon et al. (2005); Nadal et al. (2005); Phan and Pajot (2006) (see Phan and Semeshenko (2007) for an introduction and a review of literature). GNP model has been generalized to a large class of distributions in Gordon et al. (2006). It allows to study the collective behavior of a population of interacting heterogeneous agents. Numerous papers in this field concern homogeneous agents with stochastic choices, in particular, among others: Brock and Durlauf (2001)-hereafter BD model. Our GNP class of models differs by the nature of the disorder. The former belongs to the classes of Random Utility Models (RUM): the utility is stochastic. The individual preferences have an identical deterministic part and the heterogeneity across agents comes from the random term of the RUM. In our noiseless GNP model, agents are heterogeneous with respect to their idiosyncratic preferences (IWA) which remain fixed and do not contain stochastic term. This model belongs to the class of the Quenched Random Field Ising Models, know in statistical physics.

Keywords: Binary Choice; Heterogeneous Agent; Local Social; Potential Game; Random Utility Model (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-540-73135-1_13

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DOI: 10.1007/978-3-540-73135-1_13

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