CONTENT

Economic modeling is the core of most economic analysis, but how can models really help us
understand and analyze the economy? How well do equilibrium models, such as the ones taught
in most economics lectures, represent the real-world phenomena they try to replicate? What are
their strengths and limitations?
In light of these questions, the seminar introduces agent-based models (ABMs), a class of
computational models that approaches economic questions from a different perspective. ABMs
treat the economy as a complex adaptive system, where macroeconomic phenomena emerge from
the behavior and interaction of heterogeneous agents. In contrast to equation-based equilibrium
models, ABMs cannot be solved mathematically, but need to be simulated and the output analyzed
afterwards.
ABMs are a flexible research tool that can be applied to many different topics and for various
purposes. The seminar focuses on market dynamics, starting from a standard supply and demand
framework. After implementing a simple market model, assumptions about the structure of the
artificial economy and agents’ behaviors will gradually be loosened to explore ways of modeling
more realistic representations of market interactions.
To implement these models, the seminar utilizes NetLogo, a beginner-friendly software designed
to program ABMs. Students will be introduced to the software and gradually learn how to work
with it over the course of the seminar.
By the end of the semester, students should be able to expand existing NetLogo ABMs or even
program their own small models. After finishing the course, agent-based modeling can further be
used as a research method for Bachelor theses or applied in certain Master modules.

MODULE OBJECTIVES

• You understand the purpose of economic modeling and how far models can be used to
  understand and analyze economic phenomena.
• You learn how to work with ABMs and how to interpret their results.
  
• You acquire basic knowledge to implement your own agent-based models.
  
• You will learn how to use the ABM programming platform NetLogo

PREREQUISITES

You will need good skills in written and spoken English. Some affinity to computers and
programming would be helpful, but no previous coding experience is required.

ORGANIZATION AND ASSESSMENT

The seminar is composed of theoretical sessions, interactive discussions, and programming
exercises. The theoretical parts address the methodology of economic modeling in general and
agent-based modeling in particular. Building on this, the usefulness of different modeling
approaches for explaining economic phenomena will be discussed. Finally, coding tutorials first
introduce the software NetLogo, which is then used to develop different types of market ABMs
together in class.
At the end of the semester, students will be tasked with extending one of the models developed in
the course in teams of 2 - 3 students. The seminar papers will be based on these model extensions.
Apart from the seminar paper, two small coding assignments (“Studienleistungen”) need to be
passed during the semester. These assignments are not graded, but are meant to allow for
practicing the use of NetLogo and receiving feedback on it.

Deadline for the term paper: 14.8.2023