Posts Tagged ‘Bonabeau’

ABMs and MBMs

Monday, January 30th, 2012

The focus on Bonabeau’s article here is of agent-based models (ABMs) and market-based models (MBMs). A main difference between an ABM and an MBM is that the former focuses on individual behaviour while the latter deals with collective behaviour. Furthermore, ABMs are driven by the bottom-up approach (focus is placed on the individuals), in contrast to the top-down approach (focus is on the collective) of the classic MBMs.

“ABM captures that emergent phenomenon in a natural way” (7282). Is this much different than a general equilibrium MBM? The MBMs that are largely based on the neo-classical economics are founded on similar ideals of natural systems, such as laissez-faire economics and Adam Smith’s infamous ‘invisible hand’. Referring to another model, Bonabeau states that “each agent acts individually but has perfect knowledge of how many users there are in the population” (7287). Whenever ‘perfect’ is utilized, it reminds me of the classical economic market systems where perfect competition, perfect information, and full employment are all assumptions made in assessing a market scenario with a standard economic model.

Bonabeau is at times too eager and possibly even blinded by his excitement of his tool: “ABM is perfect not just for operational risk in financial institution but for modeling risk in general” (7285). It is problematic to be this certain about a tool that is not fully understood, which he actually takes note of: if ABM is introduced in the market and is unsuccessful, potentially harming individuals with the predictions, or rather understanding (as the article emphasizes) of a situation, then the overestimated tool may do more damage than good. However, the article does mention this, but does not go into detail explaining why “agents behave in a way that is still poorly understood” (7284). Perhaps the statement “AMBs are more of a mindset than a technology” (7280)alludes to this problem. Can we change the modern market system with ABMs if we are aware of their positive and negative implications? Is it possible to create economic software agents that do not simply explain human economic behaviour?

-henry miller

Agent-Based Modeling: Computation and Cost?

Thursday, January 26th, 2012

Agent-based modeling (ABM) can do ANYTHING — the basic claim being made by Eric Bonabeau in his article, Agent-based modeling: Methods and techniques for simulating human systems.  And indeed, it does appear that ABM is quite useful, particularly when examining heterogeneous populations, as we can see in “virtually every example in this article”, to quote the author himself.  While I still wonder about the validity of ABM in certain situations, and can’t help but feel unsure about the authors’ exuberant claims in his writing, there was one thing particularly that I found missing from this article: computation and cost.

While Bonabeau does devote one or two sentences at the very end of the article to the high level of computational power required for these types of models, he does not, in my opinion, adequately express not only how important this one factor may be, but also all the additional factors inherent with data-heavy models such as this.  For example, he makes no reference to the amount of data collection that must go into creating these models.  Even a basic GIS user understands that a superficial layer of data is not interesting, but anything more than that requires a lot of commitment to collecting data.  In this case, working with human systems, to me that implies surveying people about their behaviours, how they make decisions, and so on.  This means time and monetary commitment.  And this leads to my larger criticism: the most telling aspect was how the companies he referred to were primarily established, and I would assume, wealthy, companies or organizations who could afford to use ABMs to make better management decisions.  Despite this, nowhere does he discuss cost.  Surely this technology does not come cheap?  And if it does, wouldn’t that make it even more desirable, and worthwhile to include?

With this knowledge, the reader (and potential user) could make a more informed decision about if ABM is not only useful, but at all possible, for them.  In the end, an interesting overview of applications of ABM, but lacking in answers to a few important questions.

Bonabeau, Eric. “Agent-based Modeling: Methods and Techniques for Simulating Human Systems.” Proceedings of the National Academy of Sciences of the United States of America. 99.10 (2002): 7280-7287. Print.