Title Page	5
	Copyright Page	6
	Contents	7
	Preface	10
	Copyright notices	11
	Chapter 1 Why agent-based modelling is useful for economists	13
	1.1 Introduction	13
	1.2 A very brief history of economic modelling	13
	Traditional macroeconomic models	14
	Dynamic stochastic general equilibrium models	14
	Complexity economics	14
	The impact of the 2008 economic crisis	15
	1.3 What is ABM?	16
	1.4 The three themes of this book	17
	Heterogeneity	17
	Dynamics	17
	Interactions	18
	1.5 Details of chapters	18
	Chapter 2: Starting agent-based modelling	18
	Chapter 3: Heterogeneous demand	18
	Chapter 4: Social demand	19
	Chapter 5: Benefits of barter	19
	Chapter 6: The market	19
	Chapter 7: Labour market	19
	Chapter 8: International trade	20
	Chapter 9: Banking	20
	Chapter 10: Tragedy of the commons	20
	Chapter 11: Summary and conclusions	20
	The models	20
	References	21
	Chapter 2 Starting agent-based modelling	23
	2.1 Introduction	23
	2.2 A simple market: the basic model	24
	2.3 The basic framework	25
	2.4 Enhancing the basic model: adding prices	30
	2.5 Enhancing the model: selecting traders	33
	2.6 Final enhancement: more economically rational agents	35
	2.7 Running experiments	37
	2.8 Discussion	38
	Appendix 2.A The example model: full version	39
	References	40
	Chapter 3 Heterogeneous demand	41
	3.1 Introduction	41
	3.2 Modelling basic consumer demand theory	42
	Distributing budgets	44
	Giving preferences to households	46
	3.3 Practical demand modelling	51
	3.4 Discussion	55
	Appendix 3.A How to do it	58
	Budget distribution	58
	Utility function-based demand model	59
	Practical demand model	60
	References	64
	Chapter 4 Social demand	65
	4.1 Introduction	65
	4.2 Social networks	65
	4.3 Threshold models	68
	Infection models	71
	Influence models	71
	4.4 Adoption of innovative products	74
	4.5 Case study: household adoption of fixed-line phones in Britain	76
	Modelling demographic changes	76
	Modelling income	76
	An income-only model	78
	Modelling network effects	79
	4.6 Discussion	82
	Appendix 4.A How to do it	82
	Social circles model	82
	Threshold model	84
	Phone adoption model	86
	References	90
	Chapter 5 Benefits of barter	92
	5.1 Introduction	92
	5.2 One-to-one barter	93
	The Edgeworth Box	95
	Dynamics of the Edgeworth Box	96
	5.3 Red Cross parcels	100
	Introducing shortages	106
	5.4 Discussion	108
	Appendix 5.A How to do it	109
	Edgeworth Box game	109
	Edgeworth Box random model	110
	Red Cross parcels model	112
	References	116
	Chapter 6 The market	117
	6.1 Introduction	117
	6.2 Cournot–Nash model	117
	Introduction	117
	The agent-based model	118
	6.3 Market model	120
	Introduction	120
	Consumers	124
	Shops	125
	Results	129
	6.4 Digital world model	129
	Introduction	129
	Sellers	131
	Consumers	132
	Results	132
	6.5 Discussion	136
	Appendix 6.A How to do it	137
	The Cournot–Nash model	137
	Shops model	139
	Digital world model	141
	References	143
	Chapter 7 Labour market	144
	7.1 Introduction	144
	The labour force	144
	Employers	151
	Summary	154
	7.2 A simple labour market model	154
	Stage 1: Wages	154
	Stage 2: Job search	155
	Stage 3: The Guildford labour market	160
	Results	162
	7.3 Discussion	163
	Appendix 7.A How to do it :	167
	Wage distribution model	167
	Things to try using the wage distribution model	167
	Job search model	169
	Things to try using the job search model	169
	Guildford labour market model	171
	References	173
	Chapter 8 International trade	175
	8.1 Introduction	175
	Definition of exchange rates	175
	Nominal exchange rates	175
	Effective exchange rates	176
	Real exchange rates	177
	Purchasing power parity	178
	Interest rate parity	178
	Exchange rate regimes	180
	The experience of the British pound, the US dollar and the euro	182
	8.2 Models	184
	Introduction	184
	Assumptions	185
	Inflation	186
	Depreciation	191
	Exogenous drop in demand for exports	191
	Fiscal change	194
	8.3 Discussion	195
	Appendix 8.A How to do it	197
	International trade model	197
	References	199
	Chapter 9 Banking	201
	9.1 Introduction	201
	Fractional reserve banking	201
	Banking crises and the regulation of banks	204
	A simple example	208
	9.2 The banking model	210
	A basic example	210
	Introducing the capital adequacy ratio target	214
	Affordability and different types of loans	214
	Adding interest	215
	A shock to the system	216
	9.3 Discussion	218
	Appendix 9.A How to do it	221
	Banking model	221
	Things to try	222
	References	224
	Chapter 10 Tragedy of the commons	226
	10.1 Introduction	226
	Economic analysis	227
	10.2 Model	230
	The carrying capacity of the meadow	230
	Managing the meadow	232
	10.3 Discussion	237
	Appendix: 10.A How to do it: :	240
	Carrying capacity model	240
	Meadow management model	242
	References	244
	Chapter 11 Summary and conclusions	246
	11.1 Introduction	246
	11.2 The models	246
	11.3 What makes a good model?	249
	11.4 Pros and cons of ABM	250
	References	251
	Further reading and resources	252
	Index	254
	EULA	259