Critical Overview of Agent-Based Models for Economics

TL;DR

This paper reviews key agent-based models in economics, emphasizing their role in explaining financial market dynamics beyond classical theories, and discusses future research directions and neglected topics.

Contribution

It provides a comprehensive overview of agent-based models in economics, highlighting their importance and identifying open questions and future perspectives.

Findings

Agent-based models help explain financial market dynamics beyond classical theories

Analysis of models reveals key factors like strategies, price evolution, and agent numbers

Highlights neglected topics such as non-stationarity and self-organization in markets

Abstract

We present an overview of some representative Agent-Based Models in Economics. We discuss why and how agent-based models represent an important step in order to explain the dynamics and the statistical properties of financial markets beyond the Classical Theory of Economics. We perform a schematic analysis of several models with respect to some specific key categories such as agents' strategies, price evolution, number of agents, etc. In the conclusive part of this review we address some open questions and future perspectives and highlight the conceptual importance of some usually neglected topics, such as non-stationarity and the self-organization of financial markets.