Experimental Economics for ABM Validation

Abstract This chapter is a review about the relation between two disciplines, Behavioral Economics and Agent-Based Model. Since the approaches of these disciplines are quite different, they share a common feature: the analysis of the individual behavior by discarding the neoclassical assumptions. This implies that these kinds of analysis complement each others. At the beginning of the chapter, there is a brief review about the origin of Behavioral Economics and of Experimental Economics. After clarifying what is an experiment and how does it work, we explain how to use experiments to validate and/or calibrate Agent-Based Models. Finally, we present three different applications to clarify and show how to implement the processes of both calibration and validation by starting from experimental data.

[1]  W. Edwards.  The theory of decision making. , 1954, Psychological bulletin.

[2]  John D. Hey,et al.  Expectations formation: Rational or adaptive or...? , 1994 .

[3]  Daniel G. Brown,et al.  Effects of Heterogeneity in Residential Preferences on an Agent-Based Model of Urban Sprawl , 2006 .

[4]  A. Roth,et al.  Learning in Extensive-Form Games: Experimental Data and Simple Dynamic Models in the Intermediate Term* , 1995 .

[5]  U. Fischbacher,et al.  Social norms and human cooperation , 2004, Trends in Cognitive Sciences.

[6]  Raymond C. Battalio,et al.  Tests of rational expectations in a stark setting , 1989 .

[7]  E. Fehr,et al.  Does Money Illusion Matter? , 1998 .

[8]  H. Simon,et al.  A Behavioral Model of Rational Choice , 1955 .

[9]  Armin Falk,et al.  A Theory of Reciprocity , 2001, Games Econ. Behav..

[10]  M. Rothschild.  A two-armed bandit theory of market pricing , 1974 .

[11]  Mauro Gallegati,et al.  Reconstructing economics: Agent based models and complexity , 2012 .

[12]  C. Noussair,et al.  Price Bubbles in Laboratory Asset Markets with Constant Fundamental Values , 2001 .

[13]  H. Simon.  Birth of an Organization: The Economic Cooperation Administration , 1953 .

[14]  Coordination of Expectations in Asset Pricing Experiments , 2005 .

[15]  Richard Blundell,et al.  Heterogeneity and aggregation , 2005 .

[16]  J. Anderies,et al.  Governance and the Capacity to Manage Resilience in Regional Social-Ecological Systems , 2006 .

[17]  W. Arthur.  Designing Economic Agents that Act Like Human Agents: A Behavioral Approach to Bounded Rationality , 1991 .

[18]  Shinichi Honiden,et al.  Agent-Based Participatory Simulations: Merging Multi-Agent Systems and Role-Playing Games , 2006, J. Artif. Soc. Soc. Simul..

[19]  John Duffy,et al.  Agent-Based Models and Human Subject Experiments , 2004 .

[20]  Alberto Russo,et al.  Reciprocity in the labour market: experimental evidence , 2014 .

[21]  E. Ostrom,et al.  Empirically Based, Agent-based models , 2006 .

[22]  T. Sargent,et al.  Rational Expectations and Econometric Practice , 1982 .

[23]  Paul Windrum,et al.  A Critical Guide to Empirical Validation of Agent-Based Models in Economics: Methodologies, Procedures, and Open Problems , 2007 .

[24]  Tran Ngoc Trung,et al.  Participatory Simulation of Land-Use Changes in the Northern Mountains of Vietnam: the Combined Use of an Agent-Based Model, a Role-Playing Game, and a Geographic Information System , 2005 .

[25]  Alberto Russo,et al.  The Impact of Inequality on Cooperation: An Experimental Study , 2014 .

[26]  Robert G. Sargent,et al.  Verification and validation of simulation models , 2013, Proceedings of Winter Simulation Conference.

[27]  Cars Hommes,et al.  Evolutionary Selection of Individual Expectations and Aggregate Outcomes , 2012 .

[28]  Roberto Leombruni,et al.  A Common Protocol for Agent-Based Social Simulation , 2006, J. Artif. Soc. Soc. Simul..

[29]  Alan Kirman,et al.  The economy as an evolving network , 1997 .

[30]  I. Gilboa,et al.  Case-Based Decision Theory , 1995 .

[31]  J. Andreoni.  Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence , 1989, Journal of Political Economy.

[32]  John D. Sterman,et al.  Testing Behavioral Simulation Models by Direct Experiment , 1987 .

[33]  C. Noussair,et al.  Money Illusion and Nominal Inertia in Experimental Asset Markets , 2008 .

[34]  G. Gigerenzer,et al.  As-If Behavioral Economics: Neoclassical Economics in Disguise? , 2010 .

[35]  Paul Windrum,et al.  Empirical Validation of Agent-Based Models: Alternatives and Prospects , 2007, J. Artif. Soc. Soc. Simul..

[36]  Thomas Berger,et al.  Research, part of a Special Feature on Empirical based agent-based modeling Creating Agents and Landscapes for Multiagent Systems from Random Samples , 2006 .

[37]  Luigi Orsenigo,et al.  Learning, market selection and the evolution of industrial structures , 1995 .

[38]  K. Velupillai,et al.  Behavioural Economics : Classical and Modern ♣ , 2011 .

[39]  Colin Camerer,et al.  The Impact of Simple Institutions in Experimental Economies with Poverty Traps , 2005 .

[40]  John Duffy,et al.  Chapter 19 Agent-Based Models and Human Subject Experiments , 2006 .

[41]  James M. Walker,et al.  Group size and the voluntary provision of public goods : Experimental evidence utilizing large groups , 1994 .

[42]  Rachel T. A. Croson,et al.  Income and wealth heterogeneity in the voluntary provision of linear public goods , 2006 .

[43]  E. Fama.  EFFICIENT CAPITAL MARKETS: A REVIEW OF THEORY AND EMPIRICAL WORK* , 1970 .

[44]  E. Fehr,et al.  Gift Exchange and Reciprocity in Competitive Experimental Markets , 1995 .

[45]  C. Noussair,et al.  Equilibrium Selection in an Experimental Macroeconomy , 2007 .

[46]  V. Smith,et al.  Bubbles, Crashes, and Endogenous Expectations in Experimental Spot Asset Markets , 1988 .

[47]  R. Ricciuti.  Bringing Macroeconomics into the Lab , 2008 .

[48]  Joshua M. Epstein,et al.  Growing Artificial Societies: Social Science from the Bottom Up , 1996 .

[49]  J. Quiggin.  A theory of anticipated utility , 1982 .