Discussion Paper

No. 2015-45 | June 17, 2015
Agent-based Modeling for Decision Making in Economics under Uncertainty


Ever since the emergence of economics as a distinct scientific discipline, policy makers have turned to economic models to guide policy interventions. If policy makers seek to enhance growth of an open capitalist economy, they have to take into account, firstly, the uncertainties, inefficiencies, and market failures faced by the agents in the economy, and, secondly, the activities, network structure, and interactions in the innovation & production system. The authors discuss ins-and-outs of developing and using (encompassing and empirically calibrated) agent-based models for (i) abductive theorizing about causes for empirical realities, and (ii) evaluating effects of policy interventions. To ensure that derived policies are suitable to intervene in the real world and not just the stylization of it, they discuss validity and operationalization of agent-based models as well as interpretation of simulation results.

JEL Classification:

B52, C63, D81, O32, P10


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Cite As

Ben Vermeulen and Andreas Pyka (2015). Agent-based Modeling for Decision Making in Economics under Uncertainty. Economics Discussion Papers, No 2015-45, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2015-45

Comments and Questions

Anonymous - Referee Report 1
July 15, 2015 - 08:58

see attached file

Ben Vermeulen - Reply
October 08, 2015 - 08:48

Sorry for the late reply!