2006-11-12 papers

on Computational Economics

Issue of 2006‒11‒12
two papers chosen by

Social Consequences of Commitment By Isaac, Alan G
What if Hayek goes shopping in the bazaar? By Lamieri, Marco; Bertacchini, Enrico

By:	Isaac, Alan G
Abstract:	This paper begins with a detailed computational introduction to a classic ACE model: an evolutionary prisoner's dilemma. The paper presents a simple but fully coded object oriented implementation of this model. (We use the Python programming language, which is shown to be a natural ally for ACE research). Using these tools, we demonstrate that player type evolution is affected by cardinal payoffs. We then explore a possible social benefit to commitment, where 'commitment' denotes an unwillingness to surrender a reciprocal strategy.
Keywords:	ACE; agent-based; computational economics; iterated prisoner's dilemma; evolutionary prisoner's dilemma; commitment
JEL:	C73 C63
Date:	2006–10–11
URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:414&r=cmp

What if Hayek goes shopping in the bazaar?

By:	Lamieri, Marco; Bertacchini, Enrico
Abstract:	The paper presents a comparative analysis of the peculiar institutional features of two retail markets: the middle eastern Bazaar and the western Mall (shopping center). We study the informational functions and performance of the different market institutions using an Agent Based Computational Economics (ACE) model under the assumption of behavioral learning by agents. Sellers decide which price setting strategy to adopt whereas buyers form their price beliefs exploring the market and decide which price to accept. The agents learn how to adapt and behave within the specific institutional framework to carry out their economic transactions, but market institutions, as mechanisms to coordinate information of market participants are expected to affect the price dynamics. The main area of interest concerns the question of whether the economic argument on the presumed underperformance of bazaar institutions respect to more competitive markets holds true or it is necessary a reassessment on it.
Keywords:	Agent's beliefs; learning; adaptive behavior; market institutions; price dynamics
JEL:	D80 L10 C70 D40
Date:	2006–06–21
URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:367&r=cmp

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