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Simulated Economy Tutorial

(jasonfantl.com)
105 points jfantl | 3 comments | 02 Apr 25 00:05 UTC | HN request time: 0.631s | source
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dlojudice ◴[02 Apr 25 01:42 UTC] No.43552972[source]▶
Agent-based modeling offers a more realistic approach to economic systems than traditional equilibrium models. New approachs including generative agents (ABM+LLMs) are promising. J. Doyne Farmer's recent book "Making Sense of Chaos: A Better Economics for a Better World" is a great reading for those interested in this field.

https://www.amazon.com/Making-Sense-Chaos-author/dp/02412019...

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1. lamename ◴[02 Apr 25 01:46 UTC] No.43552985[source]▶
Neat, now I'm curious. Can you explain why?
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2. dlojudice ◴[02 Apr 25 01:58 UTC] No.43553034[source]▶
Agent-based models capture the messy reality of economic systems by simulating heterogeneous actors making local decisions with imperfect information, allowing for emergent phenomena, non-linear dynamics, and adaptation over time, precisely the features that equilibrium models abstract away through unrealistic assumptions of perfect rationality, homogeneity, and static optimization that fail to predict or explain crises, bubbles, and technological disruptions that define actual economic evolution. To be honest, ABMs aren't perfect either. They face challenges with calibration, validation against empirical data, computational limitations, etc.
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3. neilwilson ◴[02 Apr 25 09:31 UTC] No.43554990[source]▶
Not to mention non-ergodicity, path dependency and hysteresis.