Agent-Based Computational Economics: Simulation Tools for Heterodox Research *DRAFT* Jonathan F. Cogliano∗ Xiao Jiangy December 12, 2013 Abstract This chapter introduces Agent-Based Modeling (ABM) as a re- search tool that possesses advantages for heterodox research programs. We introduce the approach in four steps. First, we discuss the unique- ness of ABMs, which lies primarily in the flexibility to incorporate vastly heterogeneous agents and to address models with high degrees of freedom. Second, we argue that the flexibility of ABMs makes them an appropriate tool for the questions raised by Classical and (Post- )Keynesian economists. To demonstrate this point we briefly sketch two ABMs, one which constructs an environment that captures the Classical-Marxian processes of gravitation, thereby opening new path- ways in value theory, and the other is a nuanced analysis of Keynesian effective demand problems and the existence of chaotic cycles in a capi- talist economy. The last section revisits the flexibility of ABMs in order to discuss their capability of incorporating dimensions from across the broad variety of heterodox research programs. Keywords: Agent-Based Model; Computational Simulation; Heterodox Economics; Gravitation; Chaotic Cycles. JEL Classification Numbers: B5, C63. ∗
[email protected]. Assistant Professor, Department of Economics, Dickinson College, Althouse 112, P.O. Box 1773, Carlisle, PA 17013.
[email protected]. Assistant Professor, Department of Economics, Denison Univer- sity, Granville, OH 43023. 1 Introduction This chapter introduces Agent-Based Modeling (ABM) as a research tool that possesses advantages for current heterodox research programs. An ABM consists of a computer simulation of many interacting heterogeneous agents that produces an economic phenomena of interest.