Denis Phan

Social Interactions in Economic Theory: An Insight from Statistical Mechanics

This Chapter extends some economic models that take advantage of a formalism inspired from statistical mechanics to account for social influence in individual decisions. Starting with a framework suggested by Durlauf, Blume and Brock, we introduce three classes of models shifting progressively from rational towards adaptive expectations. We discuss the risk and opportunity of transposing the tools, methods and concepts from statistical mechanics to economics. We also analyze some issues seldom addressed, such as a comparison between two models of heterogeneous idiosyncratic preferences, corresponding to cases with quenched and annealed disorder in statistical physics, respectively.

DISCRETE CHOICES UNDER SOCIAL INFLUENCE: GENERIC PROPERTIES

We consider a model of socially interacting individuals that make a binary choice in a context of positive additive endogenous externalities. It encompasses as particular cases several models from the sociology and economics literature. We extend previous results to the case of a general distribution of idiosyncratic preferences, called here Idiosyncratic Willingnesses to Pay (IWP).Positive additive externalities yield a family of inverse demand curves that include the classical downward sloping ones but also new ones with non constant convexity. When

Emergence in multi-agents systems: cognitive hierarchy, detection, and complexity reduction part 1: methological issues

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Complex Behaviours in Binary choice Model withGlobal or Local social influence

, the ratio of the social influene strength to the standard deviation of the IWP distribution, is small enough, the inverse demand is a classical monotonic (decreasing) function of the adoption rate. Even if the IWP distribution is mono-modal, there is a critical value of

Chapter 8 Choice under Social Influence: Effects of Learning Behaviours on the Collective Dynamics

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Why do we need Ontology for Agent-Based Models?

above which the inverse demand is non monotonic, decreasing for small and high adoption rates, but increasing within some intermediate range. Depending on the price there are thus either one or two equilibria.Beyond this first result, we exhibit the {\em generic} properties of the boundaries limiting the regions where the system presents different types of equilibria (unique or multiple). These properties are shown to depend {\em only} on qualitative features of the IWP distribution: modality (number of maxima), smoothness and type of support (compact or infinite).The main results are summarized as {\em phase diagrams} in the space of the model parameters, on which the regions of multiple equilibria are precisely delimited.

Entanglement between Demand and Supply in Markets with Bandwagon Goods

In a pioneering book on ”artificial society” and multi-agent simulations in social sciences, (Gilbert and Conte 1995) put the emphasis on ”emergence” as a key concept of such approach: ”Emergence is one of the most interesting issues to have been addressed by computer scientists over the past few years and has also been a matter of concern in a number of other disciplines, from biology to political science” (op.cit. p.8). More recently, Agent based Computational Economics (ACE) put the emphasis on the question of emergence, following for instance (Tesfatsion 2002a) or (Axtell and Epstein and Young 2001) The present paper provides a formal definition of emergence, operative in multi-agent framework designed by Agent Oriented Programming, and which makes sense from both a cognitive and an economics point of view. Starting with a discussion of the polysemous concept of emergence, the first part of this paper is dedicated to clarifying the question by focussing on the problem of modelling cognitive agents in artificial societies. The key questions are introduced by way of a paradigmatic example. The second part of this paper is dedicated to introducing and discussing operative definitions and related implications. In order to illustrate our formal definition of emergence, a companion paper (Phan and Galam and Dessalles, 2005) discusses the ACE population game model of (Axtell and Epstein and Young 2001) and builds a multi-level-model based on the formal framework introduced in this paper.

Pricing of Goods with Bandwagon Properties: The Curse of Coordination

This paper illustrates the effects of global or local social influences uponbinary choice. Analytical results are summarized and an ACE (Agent based ComputationalEconomics) approach is used to investigate the corresponding mechanismsof interdependence in the case of a coordination problem and finite size effects.

Agent-based modelling and simulation in the social and human sciences

Abstract We consider a simple model in which a population of individuals with idiosyncratic willingnesses to pay must choose repeatedly either to buy or not a unit of a single homogeneous good at a given price. Utilities of buyers have positive externalities due to social interactions among customers. If the latter are strong enough, the system has multiple Nash equilibria, revealing coordination problems. We assume that individuals learn to make their decisions repeatedly. We study the performances along the learning path as well as at the customers’ reached equilibria, for different learning schemes based on past earned and/or forgone payoffs. Results are presented as a function of the price, for weak and strong social interactions. Pure reinforcement learning is shown to hinder convergence to the Nash equilibrium, even when it is unique. For strong social interactions, coordination on the optimal equilibrium through learning is reached only with some of the learning schemes, under restrictive conditions. The issues of the learning rules are shown to depend crucially on the values of their parameters, and are sensitive to the agents’ initial beliefs.

Seller's dilemma due to social interactions between customers

The aim of this paper is to stress some ontological and methodological issues for Agent-Based Model (ABM) building, exploration, and evaluation in the Social and Human Sciences. Two particular domain of interest are to compare ABM and simulations (Model To Model) within a given academic field or across different disciplines and to use ontology for to discuss about the epistemic and methodological consequences of modeling choices. The paper starts with some definitions of ontology in philosophy and computer sciences. The implicit and different ontology which underlies the approach of a same object of interest are discussed in the case of spatial economists and geographers. Finally, using the case of Shelling’s model, we discuss the concept of “ontological test,” and raise the question of the ontological compatibility between the “model world” and the “real world.”