Concerning the meaning of agent-based models with complex interactions in economics

Denis Phan

Abstract

Cognitive Economics considers both individual (cognitivist) and collective (evolutionists) point of view. Agent-Based Modeling (ABM) simulated by Multi-Agent System (MAS) allows us to integrate these two approaches. MAS is a complex interactive system, whose properties are generic. What kind of explanation can we expect from an ABM?

Our argumentation is based on a decomposition of the modeling activity, in which ontology occupies a central place. The model is restricted to the formal (syntactic) system. Its properties come from it (asemantic) structure: the meaning must be found in the associated ontology. But the same formal model can have several ontologies: under what conditions could a particular semantic claim to have an explanatory power in economics? The meaning and explanatory power of ABMs is discussed according to two “world in the model” approaches: the “isolationist” and “credible world”.

The discussion is illustrated by an ABM family of discreet choice with social influence that shares a common formal structure with the physical model of Ising, but differs in the auxiliary formalization of the behavior of the agents. This brings us back to the role of the cognitive and intentional assumptions of the cognitivist program, compared to the explanation by relational structures alone, which is limited to the relations between agents’ actions and their macroscopic effects, without worrying about their determinants.

Keywords

ACE, Agent Based Models, Complex Systems, MAS, Model engineering and epistemology, Ontology.

Classification JEL: B41 D01 C00.