Economic Dynamics with Heterogeneous Agents

This paper describes an agent-based model of exchange and uses it to illustrate the modelling framework offered by John Holland in his book on emergence and to propagate a hypothesis about the relationship between levels of exchange and the diversity of shadow prices. On both counts, the model described is the basis of an ongoing research project. That project looks to an object-orientated computational model of an economic system to contribute to the construction of an out of equilibrium analysis. It is argued that HollandÌs new computational framework, constrained generating procedures, facilitates more expressive agent-based models than offered by genetic algorithms. Simulations of the exchange model are used to illustrate the hypothesis that a major determinant of the volume of trade, in and out of equilibrium, is the level of diversity of pre-trade shadow prices.