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Evolution of MoneyThrough Multi-Agent Model
Abhishek Malik (Y6020)Abhishek Gupta (Y6019)
Project Guide:Prof. Amitabha Mukerjee
Introduction
• Our objective:Proto-money from barter– Agent-Based Simulation for Emergence of Money
from Barter
Related Works: Kiyotaki and Wright
• Kiyotaki and Wright did game theoretic analysis of emergence of money through nash-equilibria search. (1989)
• “On Money as a Medium of Exchange”The Game Theoretic Approach
Money as a Medium of ExchangeThe Game Theoretic Approach
• It’s a simple general equilibrium matching model, in which the objects that become media of exchange will be determined endogenously as part of the non- cooperative equilibrium.
• The driving force behind the use of money is specialization, which implies that agents do not necessarily consume what they produce. (Adam Smith, 1776)
Money as a Medium of ExchangeThe Game Theoretic Approach
• We look for strategies that maximize individuals' expected utility, given the strategies of others and the distribution of inventories. Nash equilibrium in trading strategies is characterized.
• The Economy has three indivisible commodities 1, 2, and 3; equal proportions of three types of agents 1,2, and 3.
• Type I agents derive utility from the consumption of good i and only produce good i* /= i
Money as a Medium of ExchangeThe Game Theoretic Approach
• Expected Utility = (Utility derived from consuming i) – (disutility of producing i*) – (disutility of storing a good j)
• The agents trade among with some pre-defined constraints.
• Equilibrium is attained and there may be more than one commodities of exchange.
Related Works: Duffy
• Duffy and Ochs did a human subject based study based on Kiyotaki-Wright model in 1999.
• Duffy later performedagent-based modelexperiments with moreencouraging results. (2001)
Related Works: Duffy
• In the 2001 Agent-based model study titled “Learning to speculate: Experiments with artificial and real agents”
• The two modifications to the Kiyotaki-Wright model were:1. an unequal distribution of players across types2. automating the decisions of all player types who
are not called upon to play speculative strategies in equilibrium.
Related Works: Kobayashi et.al.
• M. Kobayashi et.al. use Doubly Structural Network Model (DSN model) (2009)
• DSN:– Inner-agent model of beliefs/knowledge– Inter-agent model of social-network
• It explain concept of money as exchangeable medium.
Related Works: Kobayashi et.al.
Related Works: Kobayashi et.al.
1. Exchange: neighboring agents i & j with probability PE if both recognize exchangeability between goods.
2. Learning:i. Imitation (PI)
ii. Trimming (PT)
iii. Conceiving (PC)
iv. Forgetting (PF)
Additions to Kobayashi Model
• Additions:1. Production function
a. P = f (health)
2. Consumption (demand distribution)3. Health = f (consumption fulfillment)4. Trade by utility from commodities
a. Utility = (Demand/ Supply)b. Arranged in order for commodities and traded
accordingly
References
[1] Duffy, J., “Learning to speculate: Experiments with artificial and real agents”, Journal of Economic Dynamics & Control 25, pages 295-319. (2001)
[2] Kiyotaki, N., Wright, R., “On money as a medium of exchange”, Journal of Political Economy 97, pages 927-954. (1989)
[3] Kobayashi, M. et. al., “Simulation Modeling of Emergence-of-Money Phenomenon by Doubly Structural Network”, New Advances in Intelligent Decision Technologies, pages 585-594. (2009)
Thank You!