Why are Economists Sceptical About Agent-Based Simulations

Abstract

Despite many years of active research in the field and a number of fruitful applications, agent-based modeling has not yet made it through to the top ranking economic journals. In this paper we investigate why. We look at the following problematic areas: (i) interpretation of the simulation dynamics and generalization of the results, and (ii) estimation of the simulation model. We show that there exist solutions for both these issues. Along the way, we clarify some confounding differences in terminology between the computer science and the economic literature.

Keywords: Agent-based simulation, economic methodology