Active and Passive Learning in Agent-based Financial Markets

Blake Lebaron ()

Eastern Economic Journal, 2011, vol. 37, issue 1, 35-43

Abstract: This short note compares and contrasts two forms of learning which are present in most agent-based financial markets. First, passive learning refers to a form of “as if rationality” where wealth accumulates on strategies which have done relatively well. Second active learning refers to the active switching of agents across strategies. Most heterogeneous agent markets contain some form of both these types of learning. From what we know so far the dynamics of each may be quite different, and may yield a rich and complex joint dynamic.

Date: 2011
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