Abstract
Scientists and engineers seek to understand how real-world systems work and could work better. Any modeling method devised for such purposes must simplify reality. Ideally, however, the modeling method should be flexible as well as logically rigorous; it should permit model simplifications to be appropriately tailored for the specific purpose at hand. Flexibility and logical rigor have been the two key goals motivating the development of Agent-based Computational Economics (ACE), a completely agent-based modeling method characterized by seven specific modeling principles. This perspective provides an overview of ACE, a brief history of its development, and its role within a broader spectrum of experiment-based modeling methods.
This ACE perspective, based in part on Tesfatsion (2017, 2021b, 2022a), is an invited chapter for: R. Venkatachalam (Ed.), 2022. Artificial Intelligence, Learning and Computation in Economics and Finance, Springer, to appear. A preprint version of this ACE perspective is posted at the ISU Digital Repository as Economics Working Paper #21004; see Tesfatsion (2022j).
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Notes
- 1.
An initial-value state-space model is a state-space model for a dynamic system S that runs forward through time, commencing at some specified start-time \(t^{o}\), with all boundary conditions taking the form of constraints on the state of S at the start-time \(t^{o}\).
- 2.
This essay was brought to my attention circa 1985 by Bob Rider, a Ph.D. student in the Department of Economics at the University of Southern California with an interest in game theory.
- 3.
As indicated by a preserved sign-up sheet, the participants in this informal meeting were: Rob Axtell; Ann Bell; Chris Birchenhall; Kai Brandt; Thomas Brenner; Charlotte Bruun; Shu-Heng Chen; Michael Gordy; Sergei Guriev; Armin Haas; Esther Hauk; Gillioz Jean-Blaise; Alan Kirman; Bob Marks; Christian Rieck; Ernesto Somma; Leigh Tesfatsion; and Nick Vriend.
- 4.
Netscape Communications Corporation, founded in April 1994 by Marc Andreessen and James H. Clark, released Netscape Navigator in November 1994 as freely downloadable software. Netscape Navigator, a successor of Mosaic (co-developed by Andreesen), was among the first browser products released in support of the mid-1990s consumer Internet revolution.
- 5.
The earliest distributed ABM/ACE news notes were not saved in retrievable form; the online posted ACE news notes (Tesfatsion 2022b) begin in February 1997. The formatting of these online ACE news notes is ancient by browser standards. Although some formatting commands used in these news notes no longer compile properly using modern browsers, the news notes have been left in their originally posted form in order to preserve their historical authenticity.
- 6.
Specifically, to reflect the name change from ABE to ACE, the website URL address was changed from http://www.econ.iastate.edu/tesfatsi/abe.htm to http://www.econ.iastate.edu/tesfatsi/ace.htm, and the mailing list address was changed from abelist@iastate.edu to acenewslist@iastate.edu.
- 7.
The annual SCE meeting is officially referred to as the International Conference on Computing in Economics and Finance (CEF).
- 8.
These welcoming economic journals include: Computational Economics; International J. of Microsimulation; J. of Economic Behavior and Organization; J. of Economic Dynamics and Control; J. of Economic Interaction and Coordination; and J. of Evolutionary Economics. For a more extensive linked listing of welcoming journals, including finance and game theory journals, see Tesfatsion (2022c).
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Acknowledgements
I am very grateful to Shu-Heng Chen, Marcin Czupryna, and Volker Grimm for their extensive thoughtful comments on a previous version of this perspective. I am also thankful to the following people for helpful comments on related topics, many directed specifically to my coverage of these related topics in Tesfatsion (2021b): Richie Adelstein; W. Brian Arthur; Bob Axelrod; Rob Axtell; Costas Azariadis; Ross Baldick; Cesar Enrique Garcia Diaz; Marty Eichenbaum; Dan Friedman; Mauro Gallegati; Nick Gotts; Omar Guerrero; Dirk Helbing; Mike Honig; Dan Houser; Marco Janssen; George Judge; Lorenzo Kristov; Sergio Mariotti; Sheri Markose; Bob Marks; Vittorio Nespeca; Dawn Parker; Gary Polhill; Steve Railsback; Ryan Schoppe; Rajiv Sethi; Ken Steiglitz; Shyam Sunder; Peter Swann; Nick Vriend; Steve Widergren; and Mike Woodford.
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Tesfatsion, L. (2023). Agent-Based Computational Economics: Overview and Brief History. In: Venkatachalam, R. (eds) Artificial Intelligence, Learning and Computation in Economics and Finance . Understanding Complex Systems. Springer, Cham. https://doi.org/10.1007/978-3-031-15294-8_4
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