The economy as an evolving network

Abstract.

The purpose of this paper is to suggest a view of the economy as a network of links between the individuals involved. One approach is to consider the structure of links as fixed as is the case with spatial models in which agents are situated on a lattice, another is to regard all links as possible but stochastic. If the probability of any of the links existing is uniform we have the situation familiar from the “population games” of evolutionary game theory. The basic idea here is to allow the network to evolve and to make the probability of each of the links dependent on the experience of the agents involved. Such analysis can give rise to interesting behaviour on the aggregate level which is very different from that which might have been predicted by looking at the individuals in isolation.