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Sunday, March 20, 2016

Perception, Expectation, and Action: A Framework for Agent-oriented Theorizing

I have posted a new paper on SSRN:
For much of the last century, economic theory was developed by aid of models who elements and structure bare a limited similarity to reality. Under the dominant paradigm, agents are modeled as obeying utility functions that are defined by systems of linear equations. While these models have been useful in conveying a particular economic logic, they do not allow for modeling the complexity of agent decision-making or agent interaction. In recent decades, agent-based computational models have emerged as a tool for applying and exploring social theory, including theories of the market. While the neoclassical formulation of rationality has been used by many to model activity, there has been little exploration in modeling the actual decision-making structure of an agent. We consider a general structure of human perception, expectation, and action that can be used to construct an agent’s whose decision-making structures include elementary economic logic and fine-grained detail of the environment.