Modelling Bounded Rationality using Evolutionary Techniques - Bruce Edmonds

1 Introduction

The purpose of this paper is to report on an approach to simulating economic agents such that their behaviour matches their known characteristics. The approach taken is to introduce characteristics of bounded rationality and learning into these simulations using evolutionary techniques.

By using an approach to modelling learning that is close to that used in genetic programming (GP) [10, 11], we open up a new range of possibilities in the credible modelling of such boundedly rational agents, where an agent has a population of candidate beliefs (or models) of its environment which evolve as it learns. This contrasts in several respects from agent modelling approaches that use "crisp" logic-like beliefs, or approaches that only involve some inductive learning. In particular multiple and frequently inconsistent beliefs are held as a resource for future model development. However, despite this contrast this approach supports integration of such a style of learning with deductive mechanisms.

Modelling Bounded Rationality using Evolutionary Techniques - Bruce Edmonds - 09 JUN 97

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