WP7 Stylized complex systems models

When building large agent-based models experience has shown it is helpful to build small-scale, simplified models that help capture, explain, and deepen understanding of core dynamics and behaviours in the large-scale model.

The goal will be to get an intuitive understanding of the economy, including nonlinear feedbacks and collective phenomena that are typically not easily addressed in standard economic models based on rational expectations.

Such stylized models will not only be useful for researchers, but also the intuitive explanations of financial and economic system behaviour they lead to will be useful to policymakers as well.

Key objectives

  • Use analytical methods from statistical mechanics and numerical simulations to study stylized ABMs of the macroeconomy to understand how and why endogenous instabilities, complex dynamics and crises can emerge at the aggregate level through interactions and feedbacks.
  • To devise and investigate mathematical models for expectation and decision – as an alternative to utility maximization – that take into account limited processing resources, uncertainty, learning and heuristics, framing, habits, etc. and to understand the relevance and impact of these effects at the aggregate level.

Deliverables

  • D7.1           A paper on statistical physics inspired agent based models
  • D7.2           Updated paper on statistical physics inspired agent based models
  • D7.3           List of guidelines and recommendations, suggested by the results obtained on stylized models