Agent-based modelling and the vindication of Mises

I've been reading agent-based modelling (ABM) literature the last week, and I am struck by its vindication of Mises's vision of economics. It turns out that to get phenomena like markets, firms, and market-clearing prices, the modelers only have to build agents that:

1) have a purpose
2) have some idea how to achieve it, even if that idea is sub-optimal
3) interact with other agents; and
4) face scarce resources.

Well, folks, this is nothing less than the basis of Mises's much reviled "praxeology." Mises just lacked the tools to formalize his vision, but they are here now.

3 comments:

  1. That's incredible, Gene!

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  2. Interesting. What kinds of interactions do they typically model? Is negotiation necessary?

    I wonder if we'd get a state if we were to throw violent interactions into the mix :)

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    Replies
    1. People have built all sorts of models including models with haggling over prices.

      And I'm sure someone has tried putting the possibility of violence in the mix, with or without the state.

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