Summary and Future Research

Abstract

It was argued in the beginning of this book that the current surge in agent-based simulation models in economics cannot be explained by the sudden increase in computational resources alone. Thus, the first part discussed agent-based simulations in the light of the limitations of current research methodologies and practices in the economics field. It was highlighted that agent-based simulation approaches are highly suited to address heterogeneous agents problems. Giving up the assumption of agent homogeneity necessarily leads to an abandoning of the rational expectations paradigm. In addressing what degree of rationality should be chosen instead, chapter 3 argued in favor of the principle of minimal rationality [70]. When considering cognitive resources as scarce, agents should be modeled as economizing on reasoning processes and employing only as much reasoning power as necessary to perform the task they are facing. It was shown at the end of chapter 3 that the trigger for the rational expectations revolution, the famous Phillips-curve debate, closely followed the principle of minimal rationality.