Modeling a Heterogeneous World
Richard Bookstaber⁎; Alan Kirman†,1 ⁎Office of the Chief Investment Officer, University of California, Oakland, CA, United States†School for Advanced Studies in the Social Sciences (EHESS), Paris, France1Corresponding author. email address: alan.kirman@ehess.fr
Abstract
This chapter takes as its starting point the idea that any model of the economy must have heterogeneous agents. Such agents together form a complex adaptive system where the aggregate behavior emerges from the interaction between the individuals. Such systems do not lend themselves to being modeled analytically. We use three examples to illustrate how one is obliged to use agent based models to capture the dynamics of such systems. ...
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