Exploratory Model Building Toward Agent-Based Economics Takashi Iba Masaharu Hirokane Hirokane Kawakami Yoshiyasu Takefuji Heizo Takenaka Post-Office Box 17, Fujisawa Keio-mae Post Office: Endo, Fujisawa, Kanagawa, Japan, zip Keio University, Japan

Simulation is …

How Building Reality? Possible World FACT simulation Model and Initial condition result

Incremental Development of the simulation model Prediction or Explanation Application Feedback Application Feedback Prediction or Explanation Incremental Development of the simulation model From the macroscopic viewpoint,

Exploratory Model Building Model Building Model Specification –Specification of initial settings Parameter Estimation Model Validation From the microscopic viewpoint,

Model Building cognitive science social psychology consumer behavior marketing science management science artificial intelligence reinforcement learning neural network algorithm model component meta-algorithm Model component adaptive component agent model component Phase 1

There are some alternative models. Phase 1

Model Building communication studies social network analysis Sociology distributed artificial intelligence agent model component relation model component composed social model Phase 1

Model Specification Phase 2

Inductive Parameter Estimation Phase 3 Deductive Parameter Estimation

Deductive Estimation (for Parameter or Model) Phase 3

Model Validation Comparison with observed data Comparison with other economic theories Comparison with empirical tendencies Phase 4 observed data other economic theories empirical tendencies

Parameter Estimation and Model Validation Phase 4 Phase 3

Total Flow of Exploratory Model Building

Automatic Model Estimation System parameter range and increments social model designs data set for validation component model designs model component data set Permission condition simulation user inputs automatic model estimation system outputs a=20 b=5.34 x=0.02 a=98 C=12000 Z>12345 some combinations of model settings application

For success with social simulation

“Neo-Instrumentalism” Instrumentalism + Extensibility of model Reality of the assumptions

Open the Black Box ! Boxed Economy Model = miniature of the entire economy