Convergence of Income Growth Rates in Evolutionary Agent-Based Economics

Details Convergence of Income Growth Rates in Evolutionary Agent-Based Economics Convergence of Income Growth Rates in Evolutionary Agent-Based Economics

2010-09-10

arxiv.org/abs/1009.2721v1

Economy

Quantitative Finance

Trading and Market Microstructure

5 pages, 2 figures

Scientific paper

We consider a heterogeneous agent-based economic model where economic agents have strictly bounded rationality and where income allocation strategies evolve through selective imitation. Income is calculated by a Cobb-Douglas type production function, and selection of strategies for imitation depends on the income growth rate they generate. We show that under these conditions, when an agent adopts a new strategy, the effect on its income growth rate is immediately visible to other agents, which allows a group of imitating agents to quickly adapt their strategies when needed.

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