Standardized Procedures in Agent-based Economic Simulations by the Use of Numerical Probability Distribution Method

M. Hosoi (Japan)


Simulation, Statistical and Probabilistic Modeling,çNumerical Probability Distribution Method,Computational Economics


Agent-based economics allows the researcher to vary the settings and the constraints of the model to reproduce a wide variety of phenomena on a computer. However, this feature leaves this method open to criticism, such as “The author picked convenient values to obtain the results that he wanted.” No general procedures have ever been established to avoid such criticism. This paper shows the standardized procedure in agent-based economic simulations, and advocates the adoption of this procedure to avoid such criticism. The chief feature of this procedure is its use of the Numerical Probability Distribution approach. This approach can be used even when distributions are unknown, and/or the sample data sizes are small, and/or there is some interdependence among parameters. Data-oriented random number generation is used to set the initial values and parameters in the model, and the Numerical Probability Distribution table is used to evaluate the results of the simulation and hypothesis testing. We believe that this approach provides an answer to researchers’ doubts about the apparently arbitrary aspects of agent-based economics.

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