Syllabus for Economics 308

Agent-Based Computational Economics (ACE):
Growing Economies from the Bottom Up

Last Updated: 30 April 2024

Last Course Offering: Spring 2009

Maintained By:
Leigh Tesfatsion
Professor Emerita of Economics
Courtesy Professor of ECpE
Iowa State University
Ames, Iowa 50011-1070
https://www2.econ.iastate.edu/tesfatsi/
tesfatsi AT iastate.edu

Econ 308 Homepage
308 Exam Policy Info
308 Exercise Policy Info
308 Course Project Info
ACE Website
ACE Demo Software
Course Overview
Topics, Readings, and Exercises

Course Overview

Modern economies are complex systems that can sometimes go awry --- witness the current financial crisis! How to get a handle on this complexity?

One approach is to model an economy computationally as a "virtual world" populated by interacting "agents." These agents can include people, social groupings, institutions, and/or biological and physical entities.

The developer of the virtual world specifies the initial states of the agents comprising the economy. One objective might be to study current empirical conditions. Another objective might be to study hypothetical conditions of interest in order to see what happens. Once the initial agent states are set, the virtual world runs forward in time driven by agent interactions, much like a bacteria culture grows in a laboratory petri dish.

Econ 308 introduces students to this exciting new virtual-world methodology for the study of economic systems. Tentatively scheduled course topics include:

As indicated at the following site, agent-based modeling is now supporting scientific research and technology for a wide variety of commercial applications:
50 Facts About Agent-Based Modeling (Slides,pdf,6MB)

Topics, Readings, and Exercise Assignments

PLEASE NOTE:

Required materials are marked below with two asterisks (**). Highly recommended materials are listed with a single asterisk (*) and some recommended materials are listed with no asterisk. Some modifications to the required and/or recommended materials might be made as the course proceeds. Any such modifications will be announced in class and will be marked on the on-line syllabus with a "new" or "updated" icon for at least one week after the modification is made.

  1. Introduction
    1. What are Complex Adaptive Systems (CAS)?
    2. What is ACE?
    3. Hands-On Introduction to Agent-Based Computational Modeling
  2. The Complexity of Decentralized Market Economies
    1. Basic Market Concepts
    2. Market Games
  3. Learning and the Embodied Mind
    1. Illustrative Examples of Situated Learning
    2. Learning Representations
  4. Application: U.S. Electric Power Market Restructuring
  5. Application: Financial Markets
  6. Interaction on Fixed Networks
  7. Formation of Interaction Networks
  8. Empirical Validation of ACE Models

Appendix: General Course Project Information

I. Introduction

I.A What are Complex Adaptive Systems (CAS)?

Key In-Class Discussion Topics:


Important: Please note that, as indicated at the top of the exercise assignment, late assignments will not be accepted -- no exceptions. An assignment is late if it is turned in after discussion of the exercise answers has commenced on the due date. If you cannot attend class on the due day, either give your exercise to a classmate for turning in or put your exercise under the instructor's office door (Heady 375) no later than 10:45am on the due date. Do not leave exercises in mailboxes or send them via email except by pre-arrangement, since they might not be received in time.


Required Readings:


Recommended Materials:

I.B What is Agent-based Computational Economics (ACE)?

Key In-Class Discussion Topics:


Required Readings:


Recommended Materials:

Other introductory source materials on CAS/ACE

I.C Hands-On Introduction to Agent-Based Computational Modeling

Key In-Class Discussion Topics:


Exercise:

** Exercise 3 (Individual - Pass/Fail): "Hands-On Introduction to Agent-Based Modeling" (pdf,27KB), Due: Tuesday, February 17, 11:00am.


Required Readings:


Recommended Materials:

II. Complexity of Decentralized Market Economies

II.A Basic Market Concepts

Key In-Class Discussion Topics:


Exercise:

** Exercise 4 (Individual, 20 Points): "Competitive Versus Strategic Pricing" (pdf,123KB), Due: Tuesday, February 24, 11:00am.


Required Readings:


Recommended Materials:

* Leigh Tesfatsion, "Notes on Price Discovery with Price-Setting Agents" (pdf,103KB).

* ACE-Related Research on Multi-Market Modeling

II.B Market Games

Key In-Class Discussion Topics:


Exercise:

** Exercise 5 (Team/Individual, 14 Points): "Zero-Intelligence Market Trading Exercise" in three versions corresponding to three different agent-based toolkits, as follows:

  1. MASON version (25KB)
  2. RepastJ version (38KB)
  3. NetLogo version (25KB)


Required Readings:


Recommended Materials:

III. Learning and the Embodied Mind

III.A Illustrative Examples of Situated Learning

Key In-Class Discussion Topics:


Required Readings:


Recommended Materials:

III.B Learning Representations

Key In-Class Discussion Topics:


Take-Home Exercises:


Required Readings:


Recommended Materials:

Other source materials related to learning

IV. Application: U.S. Electric Power Market Restructuring

Key In-Class Discussion Topics:


Required Readings:


Recommended Materials:

Other source materials related to ACE Electricity Research

General resources on electricity restructuring

V. Application: Financial Markets

Key In-Class Discussion Topics:


Required Readings:


Recommended Materials:

Other source materials related to ACE financial modeling

VI. Interaction on Fixed Networks

Key In-Class Discussion Topics:


Required Readings:


Recommended Materials:

Other source materials related to ACE network research

VII. Formation of Interaction Networks

Key In-Class Discussion Topics:


Required Readings:


Recommended Materials:

Other source materials related to ACE labor research

General resource site on network formation

VIII. Empirical Validation of ACE Models

Key In-Class Discussion Topics:


Required Readings:


Recommended Materials:

Other source materials on the empirical validation of ACE models

Appendix: General Course Project Information

Students are strongly encouraged to begin consideration of possible course project topics as soon as possible.

Please visit the Course Project Information Site for detailed information regarding course projects, including a list of course projects selected by Econ 308 students in previous years. I am available during office hours, by appointment, and anytime by email to provide guidance if desired.

Preliminary outlines for student project proposals must be turned in to the instructor during the first week following Spring break and must receive go-ahead instructor approval by the end of March. Final write-ups for student project reports are due the last day of class.

Copyright © Leigh Tesfatsion. All Rights Reserved.