Artificial Markets: Rationality and Organisation

Alan Kirman

Chapter 15 in Complexity and Artificial Markets, 2008, pp 195-234 from Springer

Abstract: Abstract Economics models markets as mechanisms linking anonymous and otherwise isolated individuals through the price system. Little attention is paid to how these markets are organised nor as to how agents interact within them. In particular it is interesting to know how agents following rather simple rules come to coordinate. This paper discusses the modelling of these important aspects of markets and suggests that building artificial markets can complement the usual theoretical, empirical or experimental approaches. Using specific examples of empirical markets the relationships that develop between agents can, for example, be modelled and the results from the simulated markets compared with the stylised facts. Artificial market models are neither ad hoc nor theory free, but thys allow us to analyse situations which are too general to permit analytic solutions.

Keywords: Average Price; Reservation Price; Gini Index; Real Market; Transaction Price (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1007/978-3-540-70556-7_15

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