Related papers: A solution for external costs beyond negotiation a…
This paper introduces a new computational framework to account for uncertainties in day-ahead electricity market clearing process in the presence of demand response providers. A central challenge when dealing with many demand response…
A dynamic model is constructed that generalises the Hartwick and Van Long (2020) endogenous discounting setup by introducing externalities and asks what implications this has for optimal natural resource extraction with constant…
The thesis of this essay is that, in heterogeneous agent macroeconomics, the assumption of rational expectations about equilibrium prices is unrealistic and should be replaced. Rational expectations imply that decision makers forecast…
This paper presents a conceptual model describing the medium and long-term co-evolution of natural and socio-economic subsystems of Earth. An economy is viewed as an out-of-equilibrium dissipative structure that can only be maintained with…
We present a novel approach to the pricing of financial instruments in emission markets, for example, the EU ETS. The proposed structural model is positioned between existing complex full equilibrium models and pure reduced form models.…
This essay discusses the advantages of a probabilistic agent-based approach to questions in theoretical economics, from the nature of economic agents, to the nature of the equilibria supported by their interactions. One idea we propose is…
Interconnected agents such as firms in a supply chain make simultaneous preparatory investments to increase chances of honouring their respective bilateral agreements. Failures cascade: if one fails their agreement, then so do all who…
A distributed, hierarchical, market based approach is introduced to solve the economic dispatch problem. The approach requires only a minimal amount of information to be shared between a central market operator and the end-users. Price…
In its most basic form, decision-making can be viewed as a computational process that progressively eliminates alternatives, thereby reducing uncertainty. Such processes are generally costly, meaning that the amount of uncertainty that can…
Traditional solvable game theory and mean-field-type game theory (risk-aware games) predominantly focus on quadratic costs due to their analytical tractability. Nevertheless, they often fail to capture critical non-linearities inherent in…
We address microscopic, agent based, and macroscopic, stochastic, modeling of the financial markets combining it with the exogenous noise. The interplay between the endogenous dynamics of agents and the exogenous noise is the primary…
This article is a follow-up of a short essay that appeared in Nature 455, 1181 (2008) [arXiv:0810.5306]. It has become increasingly clear that the erratic dynamics of markets is mostly endogenous and not due to the rational processing of…
Consider a cost-sharing game with players of different contribution to the total cost: an example might be an insurance company calculating premiums for a population of mixed-risk individuals. Two natural and competing notions of fairness…
This article introduces a novel mean-field game model for multi-sector economic growth in which a dynamically evolving externality, influenced by the collective actions of agents, plays a central role. Building on classical growth theories…
We build upon recent work [Kleinberg and Oren, 2014, Kleinberg et al., 2016, 2017] that considers present biased agents, who place more weight on costs they must incur now than costs they will incur in the future. They consider a graph…
Standard micro-economics concentrate on the description of markets but is seldom interested in production. Several economists discussed the concept of a firm, as opposed to an open labour market where entrepreneurs would recrute workers on…
Externalities are the costs that a user of a common resource imposes on others. For example, consider a FCFS M/G/1 queue and a customer with service demand of $x\geq0$ minutes who arrived into the system when the workload level was $v\geq0$…
The average economic agent is often used to model the dynamics of simple markets, based on the assumption that the dynamics of many agents can be averaged over in time and space. A popular idea that is based on this seemingly intuitive…
Persistent economic competition is often justified as a mechanism of innovation, efficiency, and welfare maximization. Yet empirical evidence across disciplines reveals that competition systematically generates fragility, inequality, and…
The Circular Economy (CE) is regarded as a solution to the environmental crisis. However, mainstream CE measures skirt around challenging the ethos of ever-increasing economic growth, overlooking social impacts and under-representing…