New Economics Papers
on Computational Economics
Issue of 2008‒06‒21
nine papers chosen by

  1. A Model-to-Model Analysis of The Repeated Prisoners' Dilemma: Genetic Algorithms vs. Evolutionary Dynamics By Xavier Vilà
  2. Beam search heuristics for quadratic earliness and tardiness scheduling By Jorge M. S. Valente
  3. CBPRS: A City Based Parking and Routing System By Boehlé, J.L.; Rothkrantz, L.J.M.; Wezel, M.C. van
  4. Evolutionary Modelling in Economics: A Survey of Methods and Building Blocks By Karolina Safarzynska; Jeroen C.J.M. van den Bergh
  5. Pricing, Capacity and Long-run Cost Functions for First-best and Second-best Network Problems By Erik T. Verhoef; Andrew Koh; Simon Shepherd
  6. Einkommensteuerschätzung in Georgien By Jastrzembski, André
  7. Políticas contra la informalidad en mercados de trabajo segmentados: un análisis de equilibrio general aplicado a Uruguay By Carmen Estrades; María Inés Terra
  8. Nachhaltigkeit in Finanz- und Sozialpolitik : Probleme und Lösungsansätze für denTransformationsprozess in Georgien By Petersen, Hans-Georg
  9. A Conceptual Model of Investor Behavior By Lovric, M.; Kaymak, U.; Spronk, J.

  1. By: Xavier Vilà
    Abstract: We study the properties of the well known Replicator Dynamics when applied to a finitely repeated version of the Prisoners' Dilemma game. We characterize the behavior of such dynamics under strongly simplifying assumptions (i.e. only 3 strategies are available) and show that the basin of attraction of defection shrinks as the number of repetitions increases. After discussing the difficulties involved in trying to relax the 'strongly simplifying assumptions' above, we approach the same model by means of simulations based on genetic algorithms. The resulting simulations describe a behavior of the system very close to the one predicted by the replicator dynamics without imposing any of the assumptions of the analytical model. Our main conclusion is that analytical and computational models are good complements for research in social sciences. Indeed, while on the one hand computational models are extremely useful to extend the scope of the analysis to complex scenar
    Keywords: Agent-Based Computational Economics, Evolutionary Game Theory, Replicator Dynamics, Model-to-Model Analysis, Repeated Prisoners' Dilemma
    JEL: C63 C72 D82
    Date: 2008–06–11
  2. By: Jorge M. S. Valente (LIAAD, Faculdade de Economia, Universidade do Porto, Portugal)
    Abstract: In this paper, we present beam search heuristics for the single machine scheduling problem with quadratic earliness and tardiness costs, and no machine idle time. These heuristics include classic beam search procedures, as well as filtered and recovering algorithms. We consider three dispatching heuristics as evaluation functions, in order to analyse the effect of different rules on the performance of the beam search procedures. The computational results show that using better dispatching heuristics improves the effectiveness of the beam search algorithms. The performance of the several heuristics is similar for instances with low variability. For high variability instances, however, the detailed, filtered and recovering beam search procedures clearly outperform the best existing heuristic. The detailed beam search algorithm performs quite well, and is recommended for small to medium size instances. For larger instances, however, this procedure requires excessive computation times, and the recovering beam search algorithm then becomes the heuristic of choice.
    Keywords: scheduling, heuristics, beam search, single machine, quadratic earliness, quadratic tardiness
    Date: 2008–06
  3. By: Boehlé, J.L.; Rothkrantz, L.J.M.; Wezel, M.C. van (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Navigational systems assist drivers in finding a route between two locations that is time optimal in theory but seldom in practice due to delaying circumstances the system is unaware of, such as traffic jams. Upon arrival at the destination the service of the system ends and the driver is forced to locate a parking place without further assistance. We propose a City Based Parking Routing System (CBPRS) that monitors and reserves parking places for CBPRS participants within a city. The CBPRS guides vehicles using an ant based distributed hierarchical routing algorithm to their reserved parking place. Through means of experiments in a simulation environment we found that reductions of travel times for participants were significant in comparison to a situation where vehicles relied on static routing information generated by the well known Dijkstra’s algorithm. Furthermore, we found that the CBPRS was able to increase city wide traffic flows and decrease the number and duration of traffic jams throughout the city once the number of participants increased.
    Keywords: dynamic routing;information systems;computer simulation
    Date: 2008–05–23
  4. By: Karolina Safarzynska; Jeroen C.J.M. van den Bergh
    Abstract: In this paper we present an overview of methods and components of formal economic models employing evolutionary approaches. This compromises two levels: (1) techniques of evolutionary modelling, including multi-agent modelling, evolutionary algorithms and evolutionary game theory; (2) building blocks or components of formal models classified into core processes and features of evolutionary systems - diversity, innovation and selection - and additional elements, such as bounded rationality, diffusion, path dependency and lock-in, co-evolutionary dynamics, multilevel and group selection, and evolutionary growth. We focus our attention on the characteristics of models and techniques and their underlying assumptions.
    Keywords: bounded rationality, evolutionary algorithms, evolutionary game theory, evolutionary growth, innovation, multilevel evolution, neo-Schumpeterian models Length 51 pages
    JEL: B52 C60 C73
    Date: 2008–06
  5. By: Erik T. Verhoef (VU University Amsterdam); Andrew Koh (University of Leeds); Simon Shepherd (University of Leeds)
    Abstract: This paper considers the use of ‘long-run cost functions’ for congested networks in solving second-best network problems, in which capacity and tolls are instruments. We derive analytical results both for general cost and demand functions and for specific functional forms, namely Bureau of Public Roads cost functions and constant-elasticity demand functions. The latter are also used in a numerical simulation model. We consider second-best cases where only a subset of links in a network is subject to tolling and/or capacity choice, and cases with and without a self-financing constraint imposed. We will demonstrate that, under certain assumptions, second-best long-run cost (or actually: generalized price) functions can be derived for most of the cases of interest, which can be used in an applied network model as a substitute for the conventional short-run user cost functions. Doing so reduces the dimensionality of the problem and should therefore be helpful in speeding up procedures for finding second-best optima.
    Keywords: Traffic congestion; Road pricing; Road capacity choice; Second-best; Networks
    JEL: R41 R48 D62
    Date: 2008–06–05
  6. By: Jastrzembski, André
    Abstract: Tax estimation is a fundamental prerequisite for a sustainable fiscal policy. This paper uses the Georgian Household Survey and s simple microsimulation model in order to describe the household incomes in Georgia for the year 2005, their structure and regional distribution within eleven historical regions. Based on a thorough analysis of the existing taxable incomes and following the documentation of the applied model both a tax allowance and three percent raise of the income tax are estimated with respect to tax revenue and distributional effects. The paper comes to the conclusion that the poor income situation of most Georgian households can be mitigated by a tax allowance but is very difficult to be financed because of expected revenue losses. In spite of some progressive distributional effects of an increase of the tax burden, most households will find a very hard to cope with additional tax liabilities.
    Keywords: tax estimation , microsimulation , income distribution , personal income tax , fiscal policy
    JEL: F47 H24 H31 H87
    Date: 2007–08
  7. By: Carmen Estrades (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); María Inés Terra (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: This paper analyses the impact of some policies against informality on the labor market, poverty and income distribution in Uruguay, using a general equilibrium model that considers a dual labor market, segmented by skill, and microsimulations. We simulate two sets of policies: payroll tax cuts and increase in enforcement on the informal sector. Both sets of policies are effective in reducing informality. Payroll tax cuts on unskilled labor increase informality among medium skill workers. In spite of that, they are successful in reducing poverty and improving income distribution. Increasing capital tax reverts the negative impact of tax reduction policies on government revenue. In this case, informality falls even more, because the policy reverts the fall in public investment, which affects directly an unskilled labor intensive sector: building. On the other hand, enforcement policies have a negative impact on wages, especially for unskilled workers. As a consequence, poverty increases.
    Keywords: informality, labor market, general equilibrium, policies, poverty, microsimulations
    JEL: D58 I32 J08 J42
    Date: 2007–12
  8. By: Petersen, Hans-Georg
    Abstract: The paper describes the content of the project “Tax-/Transfer-Reform and Fiscal Responsibility: Pathways to a Sustainable Fiscal Policy in Georgia”, which is supported for the period Fall 2005 to Spring 2008 by the VolkswagenStiftung. Within the project a knowledgetransfer is organized, concentrating on state theory, tax and transfer reform, revenue sharing as well as fiscal equalization. A short overview on the current situation in Georgia is presented. Then the main project components – tax reform, tax revenue estimation and microsimulation – are briefly discussed.
    Keywords: Sustainable fiscal policy , tax reform , fiscal equalization , microsimulation , transformation
    JEL: H24 H1 F47 H25 H71 H72 N9
    Date: 2007–08
  9. By: Lovric, M.; Kaymak, U.; Spronk, J. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Based on a survey of behavioral finance literature, this paper presents a descriptive model of individual investor behavior in which investment decisions are seen as an iterative process of interactions between the investor and the investment environment. This investment process is influenced by a number of interdependent variables and driven by dual mental systems, the interplay of which contributes to boundedly rational behavior where investors use various heuristics and may exhibit behavioral biases. In the modeling tradition of cognitive science and intelligent systems, the investor is seen as a learning, adapting, and evolving entity that perceives the environment, processes information, acts upon it, and updates his or her internal states. This conceptual model can be used to build stylized representations of (classes of) individual investors, and further studied using the paradigm of agent-based artificial financial markets. By allowing us to implement individual investor behavior, to choose various market mechanisms, and to analyze the obtained asset prices, agent-based models can bridge the gap between the micro level of individual investor behavior and the macro level of aggregate market phenomena. It has been recognized, yet not fully explored, that these models could be used as a tool to generate or test various behavioral hypothesis.
    Keywords: investor behavior;financial decision making;behavioral finance;cognitive modeling;agent-based artificial financial markets
    Date: 2008–05–23

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