Thanks for all the responses. What prompted my question was thinking about
the "end state" of the current financial crisis. The question is: what does
a successful stable economy look like? Only secondarily was I asking about
markets, wealth distribution across society, etc., which is what many of the
existing models focus on.
In attempting to describe the foundations of a stable economy I was making
the following assumptions.
- We live off the gift of free energy -- the sun. So in some sense a
stable economy requires little more than harvesting that energy.
- As human beings we have the innate (i.e., also free) ability to
transform that energy into other forms that we need. For example,
most of us
on this list are capable of writing code. I'm taking skills like that as
more free gifts from nature. Yes, it requires, education, study, practice,
etc., but ultimately it grows out of our being alive, a free gift.
- In talking about "free gifts" from nature, I'm not trying to be
spiritual, new age-y, etc. It just seems to me to be the way the world
works. So I'm willing to build it into the model.
- But, even though we live off these free gifts, we all need energy to
survive. If you look at my "Reductionist blind spot" paper, you see that we
are what I call dynamic entities. Dynamic entities need to import
externally
supplied energy to persist -- in our case food, at least. So even though we
find ourselves in a world in which there is externally supplied energy
available to be imported (from the sun and its stored versions), we
are each
still required to do something to import it for ourselves. That is, we must
each work for a living.
- Presumably a standard economic model says that we live at a subsistence
level if the amount of work we do matches our needs. If I spend all my
working hours doing nothing more than earning what I need to
survive, that's
subsistence.
- I want to allow specialization so I suggested that each agent
specializes in producing some resource but that the aggregate amount
produced exactly satisfies the needs of the producers. That is, each agent
produces N units of his specialty resource; there are N agents; N resources
are needed for survival. So if the aggregate production is evenly
distributed everyone has a subsistence living.
- A society/economy grows "richer" when it can produce enough resources
for itself without requiring everyone to work on producing those resources.
In that case, the available excess labor can produce discretionary items,
like art, pop music, software, soft drinks, philosophy, etc.
- As technology advances a smaller and smaller percentage of the
population is needed to produce the necessities. The rest can spend their
time producing discretionary items.
- So at this point we are all well fed, and we are all willing to spend
our extra money supporting our local NPR stations.
- But what happens when there is shock to the economy and people find
that they have less "wealth" than they thought they had? Presumably they
will spend less on discretionary items, and the people who create those
items will be out of work. Where do we go from there?
So I am looking for a model to explore these kinds of issues.
I must say that I'm surprised at the number of things I had to write down to
explain what I am after. I thought it would be simpler. And I want something
as simple as possible.
Any thoughts/suggestions?
-- Russ
On Sun, Apr 12, 2009 at 9:14 AM, Victoria Hughes
<[email protected]>wrote:
> Attention and *action = *the price to consume.
is it possible to have an idea / new information and not in some way,
internally or externally, react to it?
Memes spread. Humans by design infect each other on all levels.
The Complex seems like a great example: by definition intends to do this.
Idea / attention / action-reaction / experience / new idea.
And so forth.
Am enjoying the bouncing of ideas and information in this particular
string...
Tory
On Apr 12, 2009, at 7:04 AM, Jochen Fromm wrote:
The central property which emerges in markets is
the price. The central law which rules markets is
the law of supply and demand. A basic agent-based
model for markets should explain how both, the
price and the law of supply and demand, emerge
in competitive markets. It should be simple to
extend such a model to explain bubbles and crashes.
As far as I know, there is no basic model of
markets in general, there are only agent based models
of specific markets, for example stock markets,
financial markets and electricity markets. Perhaps
the law of supply and demand is too simple to justify
such a model?
Epstein and Axtell's Sugarscape is a model where
agents begin to accumulate "wealth" in some form,
but it is more about evolution of societies and less
about market mechanisms and economies.
It would be interesting to apply a basic agent-based
market model to the society of mind. If we consider the
crowd within and the battle of ideas which is going on
inside our minds, can we create an agent-based model
to explain the 'market of information' ? We have a
demand for new or highly emotional stuff, are constantly
supplied with information from the outside, and the price
we have to pay to consume it is attention.
-J.
----- Original Message ----- From: Russ Abbott
To: The Friday Morning Applied Complexity Coffee Group
Sent: Sunday, April 12, 2009 9:00 AM
Subject: [FRIAM] Agent-based market models
Does anyone know of good examples of generic agent-based market economies?
I'm thinking of something as simple as this.
A population consists of agents each of which has certain continuing needs
(such as food, clothing, shelter, Internet access, etc.) to survive. As a
starting point, let's assume that each agent needs one unit of each of N
resources every time period. Let's also assume that each agent is
specialized and is capable of creating enough of one of the needed resources
to satisfy the needs of N agents. (The fact that I used the same N in both
places was intentional.) To keep it simple let's assume that these acts of
creation occur from scratch, i.e., that the creator doesn't need raw
materials, that all that's necessary for an agent to create a needed
resource is that the agent be alive. The agents presumably develop a barter
economy, trading the resources they create for the resources they need to
stay alive. Perhaps markets develop, and perhaps money develops. At this
point the economy should be fairly stable. Each agent creates enough stuff
so that s/he can trade it for what s/he needs to stay live.
Perhaps some of the agents learn how to be more efficient in creating their
resource and begin to accumulate "wealth" in some form. Perhaps the agents
have discretionary desires, which they fill if they have enough resources
left over after meeting their basic needs. Perhaps there are communal
services that are paid for by taxes or memberships. This could become
increasingly elaborate.
It seems to me that models of this sort must have been developed -- perhaps
many times. Does anyone know of any references to this sort of work?
Thanks.
-- Russ Abbott
_____________________________________________
Professor, Computer Science
California State University, Los Angeles
o Check out my blog at http://bluecatblog.wordpress.com/
============================================================
FRIAM Applied Complexity Group listserv
Meets Fridays 9a-11:30 at cafe at St. John's College
lectures, archives, unsubscribe, maps at http://www.friam.org
============================================================
FRIAM Applied Complexity Group listserv
Meets Fridays 9a-11:30 at cafe at St. John's College
lectures, archives, unsubscribe, maps at http://www.friam.org
