Evolution, Organization and Economic Behavior

Evolution, Organization and Economic Behavior

Edited by Guido Buenstorf

This new and original collection of papers focuses on the intersection of three strands of research: evolutionary economics, behavioral economics, and management studies. Combining theoretical and empirical contributions, the expert contributors demonstrate that the intersection of these fields provides a rich source of opportunities enabling researchers to find more satisfactory answers to questions that (not only evolutionary) economists have long been tackling. Topics discussed include individual agents and their interactions; the behavior and development of firm organizations; and evolving firms and their broader implications for the development of regions and entire economies.

Chapter 6: Capturing Firm Behavior in Agent-based Models of Industry Evolution and Macroeconomic Dynamics

Herbert Dawid and Philipp Harting

Subjects: economics and finance, behavioural and experimental economics, evolutionary economics


6. Capturing firm behavior in agentbased models of industry evolution and macroeconomic dynamics Herbert Dawid and Philipp Harting* INTRODUCTION 1 The description of the dynamics emerging from the interaction of different types of economic actors, who independently make decisions and take actions, is a challenging task underlying any analysis of market dynamics, industry evolution or macroeconomic dynamics. This task has been tackled using a number of different approaches. In the area of evolutionary economics, the use of agent-based simulation models has traditionally been an important tool and one that continues to attract an increasing amount of research. Starting with the pioneering work of Nelson and Winter (1982), various aspects of industry dynamics have been explored using simulation methods both in rather generic industry frameworks and in specific application areas taking into account characteristic features of the considered industry (see, for example, surveys in Dawid, 2006 or Safarzynska and van den Bergh, 2010). Recently, substantial effort has also been invested in the development of agent-based closed macroeconomic models that capture the interplay of different markets and sectors in the economy while at the same time providing an explicit representation of behavior of different types of potentially heterogeneous actors and the institutions governing their (local) interaction patterns (for example, Silverberg and Verspagen, 1993; Delli Gatti et al., 2005; Dawid et al., 2009; or Dosi et al., 2010). In the tradition of evolutionary economics, this kind of work is based on the assertion that economic systems generically are not in equilibrium and aims...

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