I think that the most difficult part of modeling an economic agent-based model is to extract literature and sound micromechanisms to support agents decision-making.
I have a simple model that have the reasoning described below.
I was wondering whether anybody could help suggest alternative micromechanisms and accompanying literature to support the suggestions
This is a work in progress, I appreciatte the feedback.
Thanks
1. Firms
a. Decision on wages: given by earlier results, i.e., profits in the last quarter
b. Decision on prices: given by level of stock (Bergmann, 1974, Blinder, 1984)
c. Decision on hiring and firing: given by combination of profits and level of stocks
d. Decision on quantity: deterministic, given by capacity of production (pool of workers)
2. Workers
a. Decision on salary accepting: taken (given by the firm)
b. Decision on quantity to buy: parameter of propensity to consume (exogenous)
3. Markets
a. Matching goods: price is given, families buy by minimum price (101 economics) or minimum distance from shop
b. Matching labor: salary is given, firms paying higher salaries chooses first, workers are ranked according to qualification (Boudreau, 2010)
c. Matching housing: houses prices given by characteristics and location (typical hedonic pricing equations (textbook), DiPasquale and Wheaton, 1996); price of location evolves with incremental government investments; families are ranked by savings available and houses by prices; family with less resources bid for the cheapest houses and so on until no more houses or families on lists. Final prices (may be) the average of offered and asked prices [at the moment prices are given by houses characteristics only]
Ola Bernardo!
For firms:
It could be worthy considering sticky wages: Heckel, T., Le Bihan, H., & Montornès, J. (2008). Sticky wages: evidence from quarterly microeconomic data.
For pricing it would be nice to consider competition, see for example: Klenow, P. J., & Malin, B. A. (2010). Microeconomic evidence on price-setting (No. w15826). National Bureau of Economic Research.
For workers:
About accepting the salary you could think about reservation wages: Yellen, J. (1995). Efficiency wage models of unemployment. In Essential Readings in Economics (pp. 280-289). Macmillan Education UK.
For markets:
Your matching mechanisms for the markets sound sophisticated enough, I can only think about including/testing product differentiation: Abdel-Rahman, H. M. (1988). Product differentiation, monopolistic competition and city size. Regional Science and Urban Economics, 18(1), 69-86.
* About housing, it could be interesting to introduce beliefs about the future evolution of prices, and use the model to study housing bubbles (see the preliminary paper attached).
For exchange of goods and services at the micro-level, these may be useful:
1. Hausken, K. (2004), “Mutual Raiding and the Emergence of Exchange,” Economic Inquiry 42, 4, 572-586.
2. Hausken, K. and Moxnes, J.F. (2005), “The Dynamics of Bilateral Exchange and Division of Labor,” International Journal of Modern Physics C, 16, 1, 117-137.
3. Hausken, K. and Moxnes, J.F. (2005), “The Dynamics of Multilateral Exchange,” International Journal of Modern Physics C, 16, 4, 607-632.
4. Hausken, K. (2008), “Exchange, Raiding, and the Shadow of the Future,” Defence and Peace Economics 19, 2, 89-106.
5. Hausken, K. (2011), “An Equilibrium Model of Advertising, Production, and Exchange,” International Journal of Economics and Business Research 3, 4, 407-442.
6. Hausken, K. (2011), “Production, Safety, Exchange, and Risk,” International Journal of Business Continuity and Risk Management 2, 4, 346-350.
7. Hausken, K. (2013), “Exchange of Goods While Investing into Production and Safety,” Operations Research and Decisions 23, 1, 29-35.
8. Hausken, K. (2014), “Two Producing and Trading Agents Defending and Retaliating Against Terrorism,” International Journal of Engineering Management and Economics 4, 2, 117-131.
9. Hausken, K. and Ncube, M. (2014), “Political Economy of Service Delivery: Monitoring versus Contestation,” The Developing Economies 52, 1, 68-84.
For production and conflict, these may be useful:
10. Hausken, K. (2005), “Production and Conflict Models Versus Rent Seeking Models,” Public Choice 123, 1, 59-93.
11. Hausken, K. (2005), “The Battle of the Sexes when the Future is Important,” Economics Letters 87, 1, 89-93.
12. Hausken, K. (2007), “Reputation, Incomplete Information, and Differences in Patience in Repeated Games with Multiple Equilibria,” Economics Letters 97, 2, 138-144.
13. Hausken, K. (2007), “Stubbornness, Power, and Equilibrium Selection in Repeated Games with Multiple Equilibria,” Theory and Decision 62, 2, 135-160.
14. Hausken, K. (2007), “The Impact of the Future in Games with Multiple Equilibria,” Economics Letters 96, 2, 183-188.
15. Hausken, K. (2009), “Risk Limits, Conflict, and Equilibrium Selection in Games with Multiple Equilibria,” International Journal of Decision Sciences, Risk and Management 1, 1/2, 54-65.
16. Hausken, K. (2010), “Risk, Price, and Reimbursement,” International Journal of Decision Sciences, Risk and Management 2, 1/2, 85 - 97.
17. Hausken, K. (2010), “Risk, Production, and Conflict when Utilities are As if Certain,” International Journal of Decision Sciences, Risk and Management 2, 3/4, 228-251.
18. Hausken, K. (2011), “An Equilibrium Model of Advertising, Production, and Exchange,” International Journal of Economics and Business Research 3, 4, 407-442.
19. Hausken, K. (2011), “Production, Safety, Exchange, and Risk,” International Journal of Business Continuity and Risk Management 2, 4, 346-350.
20. Hausken, K. (2011), “Production, Safety, Fighting, and Risk,” International Journal of Business Continuity and Risk Management 2, 4, 324-329.
21. Hausken, K. (2012), “Production versus Safety in a Risky Competitive Industry,” International Journal of Decision Sciences, Risk and Management 4, 1/2, 92-107.
For negotiation, self-interest, altruism, principal-agent, etc., these may be useful:
22. Hausken, K. (1997), “Game-theoretic and Behavioral Negotiation Theory,” Group Decision and Negotiation 6, 6, 509-527.
23. Hausken, K. (1996), “Ethics and Efficiency in Organizations,” International Journal of Social Economics 23, 9, 15-40.
24. Hausken, K. (1996), “Self-Interest and Sympathy in Economic Behavior,” International Journal of Social Economics 23, 7, 4-24.
25. Bhimani, A., Hausken, K., and Ncube, M. (2010), “Agent Takeover Risk of Principal in Outsourcing Relationships,” Global Business and Economics Review 12, 4, 329-340.
26. Bhimani, A., Hausken, K., and Ncube, M. (2012), “Acquisition and Collaboration as Determinants of Organizational Structure,” International Journal of Integrated Supply Management 7, 1/2/3, 3-37.
Incorporating crime, these may be useful:
27. Hausken, K. and Moxnes, J.F. (2005), “The Dynamics of Crime and Punishment,” International Journal of Modern Physics C, 16, 11, 1701-1732.
28. Hausken, K. and Gupta, D. (2015), “Government Protection against Terrorism and Crime,” Global Crime 16, 2, 59-80.
29. Hausken, K. and Gupta, D. (2015), “Terrorism and Organized Crime: The Logic of an Unholy Alliance,” International Journal of Contemporary Sociology 52, 2, 141-166.
30. Hausken, K. and Gupta, D. (2016), “Determining the Ideological Orientation of Terrorist Organizations: The Effects of Government Repression and Organized Crime,” International Journal of Public Policy 12, 1/2, 71-97.
31. Hausken, K. (2017), “A Cost-Benefit Analysis of Terrorist Attacks,” Defence and Peace Economics, http://dx.doi.org/10.1080/10242694.2016.1158440, Forthcoming.
32. Bier, V. and Hausken, K. (2011), “Endogenizing the Sticks and Carrots: Modeling Possible Perverse Effects of Counterterrorism Measures,” Annals of Operations Research 186, 1, 39-59.
33. Hausken, K. (2012), “Terrorism Risks, Civil Liberties, and Privacy Concerns,” International Journal of Critical Infrastructures 8, 4, 293-305.
Incorporating terrorism, these may be useful:
34. Bier, V. and Hausken, K. (2011), “Endogenizing the Sticks and Carrots: Modeling Possible Perverse Effects of Counterterrorism Measures,” Annals of Operations Research 186, 1, 39-59.
35. Hausken, K. (2012), “Terrorism Risks, Civil Liberties, and Privacy Concerns,” International Journal of Critical Infrastructures 8, 4, 293-305.
36. Hausken, K. and Gupta, D. (2015), “Government Protection against Terrorism and Crime,” Global Crime 16, 2, 59-80.
37. Hausken, K. and Gupta, D. (2015), “Terrorism and Organized Crime: The Logic of an Unholy Alliance,” International Journal of Contemporary Sociology 52, 2, 141-166.
38. Hausken, K. (2017), “A Cost-Benefit Analysis of Terrorist Attacks,” Defence and Peace Economics, http://dx.doi.org/10.1080/10242694.2016.1158440, Forthcoming.
39. Hausken, K. and Gupta, D. (2016), “Determining the Ideological Orientation of Terrorist Organizations: The Effects of Government Repression and Organized Crime,” International Journal of Public Policy 12, 1/2, 71-97.
Incorporating war, these may be useful:
40. The Lanchester war models have outcomes that depend on the initial conditions, and information is complete, see e.g.:
41. Hausken, K. and Moxnes, J.F. (2000), “The Microfoundations of the Lanchester War Equations,” Military Operations Research 5, 3, 79-99.
42. Hausken, K. and Moxnes, J.F. (2002), “Stochastic Conditional and Unconditional Warfare,” European Journal of Operational Research 140, 1, 61-87.
43. Hausken, K. and Moxnes, J.F. (2005), “Approximations and Empirics for Stochastic War Equations,” Naval Research Logistics 52, 682-700.
44. Hausken, K. (2016), “Cost-Benefit Analysis of War,” International Journal of Conflict Management 27, 4, 454-469.