Journal article
Agent based modeling in economics and finance: past, present, and future
- Abstract:
- Agent-based modeling (ABM) is a novel computational methodology for representing the behavior of individuals in order to study social phenomena. Its use is rapidly growing in many fields. We review ABM in economics and finance and highlight how it can be used to relax conventional assumptions in standard economic models. In economics, ABM has enriched our understanding of markets, industrial organization, labor, macro, development, environmental and resource economics, as well as policy. In financial markets, substantial accomplishments include understanding clustered volatility, market impact, systemic risk and housing markets. We present a vision for how ABMs might be used in the future to build more realistic models of the economy and review some of hurdles that must be overcome to achieve this.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
Actions
Access Document
- Files:
-
-
(Preview, Accepted manuscript, pdf, 5.9MB, Terms of use)
-
- Publisher copy:
- 10.1257/jel.20221319
Authors
- Publisher:
- American Economic Association
- Journal:
- Journal of Economic Literature More from this journal
- Volume:
- 63
- Issue:
- 1
- Pages:
- 197–287
- Publication date:
- 2025-03-04
- Acceptance date:
- 2022-06-13
- DOI:
- EISSN:
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2328-8175
- ISSN:
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0022-0515
- Language:
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English
- Pubs id:
-
1264077
- Local pid:
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pubs:1264077
- Deposit date:
-
2022-06-17
Terms of use
- Copyright date:
- 2025
- Notes:
- This is the accepted manuscript version of the article. The final version is available online from American Economic Association at https://dx.doi.org/10.1257/jel.20221319
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