This paper studies network formation in settings where players are heterogeneous with respect to benefits as well as the costs of forming links. Our results demonstrate that centrality, center-sponsorship and short network diameter are robust features of equilibrium networks. We find that in a...

This paper studies network formation in settings where players are heterogeneous with respect to benefits as well as the costs of forming links. Our results demonstrate that centrality, center-sponsorship and short network diameter are robust features of equilibrium networks. We find that in a...

In this paper, we analyze a generalization of the evolutionary model of Kandori, Mailath, & Rob (1993) where the population is partitioned into groups and evolution takes place "in parallel" at the following two levels: (i) within groups, at the lower level; among groups, at the higher one....

This chapter explores the state of the emerging practice of designing markets by the use of agent-based modeling, with special reference to electricity markets and computerized (on-line) markets, perhaps including real-life electronic agents as well as human traders. The paper first reviews the...

According to the risk-free rate puzzle the return on safe assets is much lower than predicted by standard representative agent models of consumption based asset pricing. Based on non-additive probability measures arising in Choquet decision theory we develop a closed-form model of Bayesian...

Psychological evidence suggests that people's learning behavior is often prone to a 'myside bias' or 'irrational belief persistence' in contrast to learning behavior exclusively based on objective data. In the context of Bayesian learning such a bias may result in diverging posterior beliefs and...

We study compliance dynamics generated by a large set of behavioral rules describing social interaction in a population of agents facing an enforcement authority. When the authority adjusts the auditing probability every period, cycling in cheating-auditing occurs: Intensive monitoring induces...

We analyze the strategic behavior of firms when demand is determined by a rule of thumb behavior of consumers. We assume consumer dynamics where individual consumers follow simple behavioral decision rules governed by imitation and habit as suggested in consumer research. On this basis, we...

In our model, individual consumers follow simple behavioral decision rules based on imitation and habit as suggested in consumer research, social learning, and related fields. Demand can be viewed as the outcome of a population game whose revision protocol is determined by the consumers'...