Abstract
An agent-based model of the investment game is proposed to study the complex dynamics between trust, growth, and inequality with different underlying technologies. It is found that agents in this economy, through learning to trust and to be trustworthy, are able to coordinate themselves well in networking, which hence facilitates wealth creation. The excessive smoothness in economic growth is, therefore, prevalent in all simulations, and the underlying technologies can only determine the speed of growth and network formation. While the advancement of technology can ameliorate the inequality of wealth distribution, it also lowers the social mobility of the agents.
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Notes
- 1.
For a brief survey, see (Chen et al. 2014).
- 2.
This function (6) can be made more flexible to accommodate different hypotheses of network productivity; for the details, see (Chen et al. 2014).
- 3.
For either altruistic reasons or other strategic reasons, violations of this assumption are possible, but in this paper we shall refrain from the more thoughtful design.
- 4.
Here, we use the term “seeming” or “subjective”, because agent i cannot have a direct observation of agent j’s portfolio,
$$ {\left\{{w}_{j,l}(t)\right\}}_{l\in {N}_{j,S}(t)\cup \left\{j\right\}}, $$to estimate his proportion in agent j’s portfolio. For example, k j,i (t) can be large in absolute size, but relatively small in terms of its weight in the portfolio. In this case, agent j may not trust agent i as much as may be apparent.
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Acknowledgment
The authors are grateful to the two anonymous referees for their comments and suggestions. The NSC grant NSC 101-2410-H-004-010-MY2 is also gratefully acknowledged. The remaining errors are solely the responsibility of the authors.
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Chen, SH., Chie, BT. (2015). Trust, Growth, and Inequality: An Agent-Based Model. In: Nakai, Y., Koyama, Y., Terano, T. (eds) Agent-Based Approaches in Economic and Social Complex Systems VIII. Agent-Based Social Systems, vol 13. Springer, Tokyo. https://doi.org/10.1007/978-4-431-55236-9_9
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DOI: https://doi.org/10.1007/978-4-431-55236-9_9
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