An economy consists of agents: rms, consumers, governments, e t c. .. , endowed with interests, a... more An economy consists of agents: rms, consumers, governments, e t c. .. , endowed with interests, abilities, and information who interact in real time. These agents behave in response to their incentive structures subject to certain constraints. The importance of incentives and the ability o f h uman actors to adapt their behavior to change their decisions or decision making rules distinguishes social systems from physical systems. This paper demonstrates how the interplay between incentives and the timing of updating can alter ndings signi cantly in economic models with neighborhood e ects. The analysis considers cellular automata models in which the timing of updating is varied from synchronous, to random asynchronous, to incentive based asynchronous. Signi cant and interesting di erences in the dynamics and steady states are found and explained under each updating rule. Cellular automata are unfamiliar to many economists. Some background information helps to place the ndings in context. Cellular automata CA are dynamical systems de ned on lattices in which time, states, and spatial relationships are discrete. The state of each cell on the lattice updates at each time step according to a local rule. This local rule depends not only on the current state of the cell but also on the states of cells in a neighborhoodaround the cell. Cellular automata provide a simple, adaptable framework in which to analyze complex dynamical systems. Even one dimensional cellular automata can exhibit a wide range of dynamic behavior including chaos Wolfram 1992. The potential impact of cellular automata on economics is not insigni cant. Cellular automata allow for models in which economic and social behavior occur through local interactions including models in which economic agents possess only localized knowledge of prices and opportunities. One implication of an agent based modeling perspective is that ine ciences may persist in an economy Tesfatsion 1994. CAs can be used to model many p h ysical, biological, and social systems. Recently, there has been work on extending CAs to allow for a continuum of states and continuous
Empirical evidence demonstrates that cultures exist, they differ from one another, they’re cohere... more Empirical evidence demonstrates that cultures exist, they differ from one another, they’re coherent and yet diversity persists within them. In this paper, we describe a multi-dimensional model of cultural formation that produces all of these properties. Our model includes two forces: an internal desire to be consistent and social pressure to conform. When both forces operate, the society converges to a coordinated behavior that is consistent across the attributes. We find that convergence in the two-force model is slower than a pure conformity model and that a preponderance of one force over the other slows convergence, rather than hastening it. We further find that the two forces amplify small errors in individual behavior and prove capable of producing substantial persistent diversity.
In this paper, we construct a simple model that simultaneously produces inter cultural heterogene... more In this paper, we construct a simple model that simultaneously produces inter cultural heterogeneity, distinct cultural signatures, and intra cultural heterogeneity. Our model assumes only that people pursue both consistency and conformity. We show that these two incentives produce distinct, diverse cultures but because they partially work at cross purposes they do not lead to fast intra cultural convergence. When we increase the relative strength of one of the forces, we exacerbate this tension. In an expanded version of the model that allows for errors, or what could be considered occasional idiosyncratic behavior, we find that small amounts of error result in substantial intra cultural differences. This result arises even though each force acting alone produces only moderate levels of intra cultural heterogeneity, thereby revealing the pitfalls of studying individual forces in isolation and extrapolating to their combined effects. Though here we apply our model to cultures, we co...
In this article I clarify the often muddled distinctions between uncertainty, difficulty, and com... more In this article I clarify the often muddled distinctions between uncertainty, difficulty, and complexity and show that all three can enhance our understanding of institutional performance and design. To cope with uncertainty, institutions align incentives for information revelation; to handle difficult problems, institutions create incentives for diverse problem-solving approaches; and to harness complexity, institutions adjust selection criteria, rates of variation, and the level of connectedness. The distinction between complex systems and equilibrium systems also necessitates a discussion of the differences between the existence, stability, and attainment of equilibria and why, despite often being neglected, the latter two concepts are important to our understanding of institutions.
Computational and Mathematical Modeling in the Social Sciences Mathematical models in the social ... more Computational and Mathematical Modeling in the Social Sciences Mathematical models in the social sciences have become increasingly sophisticated and widespread in the last decade. This period also has seen many critiques, most lamenting the sacrifices incurred in ...
An economy consists of agents: rms, consumers, governments, e t c. .. , endowed with interests, a... more An economy consists of agents: rms, consumers, governments, e t c. .. , endowed with interests, abilities, and information who interact in real time. These agents behave in response to their incentive structures subject to certain constraints. The importance of incentives and the ability o f h uman actors to adapt their behavior to change their decisions or decision making rules distinguishes social systems from physical systems. This paper demonstrates how the interplay between incentives and the timing of updating can alter ndings signi cantly in economic models with neighborhood e ects. The analysis considers cellular automata models in which the timing of updating is varied from synchronous, to random asynchronous, to incentive based asynchronous. Signi cant and interesting di erences in the dynamics and steady states are found and explained under each updating rule. Cellular automata are unfamiliar to many economists. Some background information helps to place the ndings in context. Cellular automata CA are dynamical systems de ned on lattices in which time, states, and spatial relationships are discrete. The state of each cell on the lattice updates at each time step according to a local rule. This local rule depends not only on the current state of the cell but also on the states of cells in a neighborhoodaround the cell. Cellular automata provide a simple, adaptable framework in which to analyze complex dynamical systems. Even one dimensional cellular automata can exhibit a wide range of dynamic behavior including chaos Wolfram 1992. The potential impact of cellular automata on economics is not insigni cant. Cellular automata allow for models in which economic and social behavior occur through local interactions including models in which economic agents possess only localized knowledge of prices and opportunities. One implication of an agent based modeling perspective is that ine ciences may persist in an economy Tesfatsion 1994. CAs can be used to model many p h ysical, biological, and social systems. Recently, there has been work on extending CAs to allow for a continuum of states and continuous
Empirical evidence demonstrates that cultures exist, they differ from one another, they’re cohere... more Empirical evidence demonstrates that cultures exist, they differ from one another, they’re coherent and yet diversity persists within them. In this paper, we describe a multi-dimensional model of cultural formation that produces all of these properties. Our model includes two forces: an internal desire to be consistent and social pressure to conform. When both forces operate, the society converges to a coordinated behavior that is consistent across the attributes. We find that convergence in the two-force model is slower than a pure conformity model and that a preponderance of one force over the other slows convergence, rather than hastening it. We further find that the two forces amplify small errors in individual behavior and prove capable of producing substantial persistent diversity.
In this paper, we construct a simple model that simultaneously produces inter cultural heterogene... more In this paper, we construct a simple model that simultaneously produces inter cultural heterogeneity, distinct cultural signatures, and intra cultural heterogeneity. Our model assumes only that people pursue both consistency and conformity. We show that these two incentives produce distinct, diverse cultures but because they partially work at cross purposes they do not lead to fast intra cultural convergence. When we increase the relative strength of one of the forces, we exacerbate this tension. In an expanded version of the model that allows for errors, or what could be considered occasional idiosyncratic behavior, we find that small amounts of error result in substantial intra cultural differences. This result arises even though each force acting alone produces only moderate levels of intra cultural heterogeneity, thereby revealing the pitfalls of studying individual forces in isolation and extrapolating to their combined effects. Though here we apply our model to cultures, we co...
In this article I clarify the often muddled distinctions between uncertainty, difficulty, and com... more In this article I clarify the often muddled distinctions between uncertainty, difficulty, and complexity and show that all three can enhance our understanding of institutional performance and design. To cope with uncertainty, institutions align incentives for information revelation; to handle difficult problems, institutions create incentives for diverse problem-solving approaches; and to harness complexity, institutions adjust selection criteria, rates of variation, and the level of connectedness. The distinction between complex systems and equilibrium systems also necessitates a discussion of the differences between the existence, stability, and attainment of equilibria and why, despite often being neglected, the latter two concepts are important to our understanding of institutions.
Computational and Mathematical Modeling in the Social Sciences Mathematical models in the social ... more Computational and Mathematical Modeling in the Social Sciences Mathematical models in the social sciences have become increasingly sophisticated and widespread in the last decade. This period also has seen many critiques, most lamenting the sacrifices incurred in ...
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