Evolutionary Models of Bargaining: Comparing Agent-Based Computational and Analytical Approaches to Understanding Convention Evolution

Jeffrey Carpenter

Computational Economics, 2002, vol. 19, issue 1, 25-49

Abstract: This paper compares two methodologies that have been used to understand the evolution of bargaining conventions. The first is the analytical approach that employs a standard learning dynamic and computes equilibria numerically. The second approach simulates an environment with a finite population of interacting agents. We compare these two approaches within the context of three variations on a common model. In one variation agents randomly experiment with different demands. A second variation posits assortative interactions, and the third allows for sophistication in agent strategies. The simulation results suggest that the agent-based approach performs well in selecting equilibria in most instances, but exact predicted population distributions often vary from those calculated numerically. Copyright 2002 by Kluwer Academic Publishers

Date: 2002
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