An Agent-Based Simulation of the Stolper–Samuelson Effect

Article

DOI: 10.1007/s10614-016-9616-x

Cite this article as:
Meisser, L. & Kreuser, C.F. Comput Econ (2016). doi:10.1007/s10614-016-9616-x
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Abstract

We demonstrate that agent-based simulations can exhibit results in line with classic macroeconomic theory. In particular, we present an agent-based simulation of an Arrow–Debreu economy that accurately exhibits the Stolper–Samuelson effect as an emergent property. Absent of a Walrasian auctioneer or any other central coordination, we let firm and consumer agents of different types interact in an open, money-driven market. Exogenous preference shocks result in price and wage shifts that are in accordance with the general equilibrium solution, not only qualitatively but also quantitatively with high accuracy. Key to this achievement are three independent measures. First, we overcome the poor input synchronization of conventional price finding heuristics of firms in agent-based models by introducing sensor prices, a novel approach to price finding that decouples information exploitation from information exploration. Second, we improve accuracy and convergence by employing exponential search as exploration algorithm. Third, we normalize prices indirectly by fixing dividends, thereby stabilizing the system’s dynamics.

Keywords

Computational economics Agent-based economics Price finding Price normalization Sensor prices System dynamics 

Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  1. 1.University of ZurichZurichSwitzerland
  2. 2.University of StellenboschStellenboschSouth Africa

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