On the Emergence of Exchange and Mediation in a Production Economy

Posted: 26 Jul 2001

See all articles by Herbert Dawid

Herbert Dawid

Bielefeld University - Department of Business Administration and Economics; Center for Mathematical Economics

Abstract

In this paper we simulate the behavior of a population of boundedly rational agents in a two good economy where all agents can spend their time budget for the production of one or both goods or trading. Agents update their strategies according to a simple imitation type learning rule with noise. It is shown that in several different setups both direct trade and trade via mediators who specialize in trading can emerge. Both increasing returns to scale in production and heterogeneity of production technologies facilitates the development of trade. For heterogeneous production technologies we can also observe the transition from a pure production economy via direct trade to an economy with mediated trade.

Keywords: Bounded rationality, Learning, Trade, Mediation

Suggested Citation

Dawid, Herbert, On the Emergence of Exchange and Mediation in a Production Economy. Available at SSRN: https://ssrn.com/abstract=251290

Herbert Dawid (Contact Author)

Bielefeld University - Department of Business Administration and Economics ( email )

P.O. Box 100131
D-33501 Bielefeld, NRW 33501
Germany
+49-521-1064843 (Phone)
+49-521-1062994 (Fax)

Center for Mathematical Economics ( email )

Postfach 10 01 31
Bielefeld, D-33501
Germany

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