Modeling economic systems as locally-constructive sequential games

Journal of Economic Methodology 24 (4):1-26 (2017)

Authors
Leigh Tesfatsion
Iowa State University
Abstract
Real-world economies are open-ended dynamic systems consisting of heterogeneous interacting participants. Human participants are decision-makers who strategically take into account the past actions and potential future actions of other participants. All participants are forced to be locally constructive, meaning their actions at any given time must be based on their local states; and participant actions at any given time affect future local states. Taken together, these essential properties imply real-world economies are locally-constructive sequential games. This paper discusses a modeling approach, Agent-based Computational Economics, that permits researchers to study economic systems from this point of view. ACE modeling principles and objectives are first concisely presented and explained. The remainder of the paper then highlights challenging issues and edgier explorations that ACE researchers are currently pursuing.
Keywords Economic systems  Local constructivity  Sequential game  Agent-based Computational Economics
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Reprint years 2017
DOI 10.1080/1350178X.2017.1382068
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The Architecture of Complexity.Herbert A. Simon - 1962 - Proceedings of the American Philosophical Society 106.

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