3
firm. Finally, the entry into the labor market is sciences [42], [43]. Furthermore, complete mi-
restricted only by age and open to all members crosimulations models of the labor market were
of the family, whereas in Lengnick [34] it is reported much earlier by Bergmann [44] and
exclusive of the head of the family. Eliasson [45].
Hence, this paper proposes a simulation More recently, agent-based models have
model of the economy which is based on previ- been applied to learning and behavior studies,
ous literature, but advances in the specific area coalition and cooperation [46]; artificial inten-
of simple microeconomic models, introducing tionality [47] and education and cognition [48],
local governments and explicit spatiality of [49]2 . A recent milestone in economics is the
markets. text of Boero et al. [51] which offers a con-
Besides this introduction, the text includes ceptual and methodological description, along
the presentation of the model (section 2), fol- with applications for human capital develop-
lowed by the presentation and discussion of ment, network analysis, the interbank payment
the results (section 3) and the proper sensitiv- systems, consulting firms, insurance systems
ity analysis. section 4 specifies possibilities of in health, ex-ante evaluation of public policies,
further development of the model that can be governance, tax, and cooperation.
easily applied, justifying the work as a theo- The methodological steps of ABMs with an
retical and methodological ’proposal’. section 5 emphasis on interpretation of empirical data
presents the final considerations. are described by Hassan et al. [52]. Two cen-
tral aspects of the methodology are verification
and validation [53], [54]. The verification step
2 T HE PROPOSED MODEL : METHODOL - assesses whether the adopted algorithm effec-
OGY, FEATURES AND PROCESSES tively does what the modeler and the developer
planned. That is, it checks the adequacy of the
In order to model the collection of local taxes
intention of the algorithm against its factual
and the provision of public goods to evaluate
implementation [55].
and compare policy options an agent-based
model of a simple economy is presented. We The validation process refers to the use of
propose a model with heterogeneous agents, historical data to assess whether the model can
dwellings, firms and governments, each with minimally replicate known trajectories. It veri-
attributes, location and specific processes at- fies that the model contains the essence of the
tached. After the description of the theoretical phenomenon. Once validated, the model can be
model, a numerical simulation is applied to the used to indicate future trajectories. Zhang et al.
set of parameters, its robustness is verified by [56] illustrate this process for the adoption of
a sensitivity analysis and the results for specific alternative car fuels.
periods of time are computed. One methodological principle of this mod-
eling process is that the decisions made and the
steps of the model are known, understood and
2.1 Agent-based modeling comparable. The scientific community suggests
2.1.1 Literature two procedures (a) the adoption of protocols,
such as the Overview, Design concepts, and
The economic analysis based on agent-based Details protocol (ODD), described by Grimm
models has its methodological groundwork et al. [57], [58]; and (b) the availability of the
laid by the ’Sugarscape’ model, developed by source code. The code used in this study is
Epstein and Axtell [38]. Before that, agent- available and can be requested to the authors.3
based models were discussed in the context of The PseudoCodes are available as appendices.
social segregation in the classical work of Nobel
author Thomas Schelling [39]; on the seminal
2. For a more detailed review, see Winikoff et al. [50]
framework of game theory and cooperation 3. Upon publication, the code will be made available in
strategies [40] and social [41] and economic GitHub and OpenABM.