General Specification:

(a) The student is expected to spend 12 hours per week on this course, which means 9-hour preparation and review work plus 3-hour class attendance.

(b) The assignment (the reading and the homework) will be given at the end of each ppt of the lecture.

(c) In this class, there will be a total of 14 lectures.

Weekly Progress

Week One (Lectured on September 1, 2025)

The Overview of the Class

(a) Wherefore Agent-Based Modeling? What are the alternatives to ABM?

(b) Why do we need ABM? Why it is relevant?

(c) Essential Ideas of ABM

(d) Interactions and Big Data

Week Two (Lectured on September 8, 2025)

Canonical Agent-Based Model (I): Cellular Automata, Part 1

(a) Precursor I: John von Neumann (1903-1957) and his work

(b) Precursor II: John Conway (1937-2020) and Game of Life

(c) Precursor III: Stephen Wolfram and Elementary Cellular Automata

Week Three (Lectured on September 15, 2025)

Canonical Agent-Based Model (I): Cellular Automata, Part 2

(a) Thomas Schelling and the Segregation Model

(b) Variants of the Schelling Model

(c) James Sakoda and the Checkerboard Model of Social Interactions

(d) Robert Axelrod and the Model of Cultural Dissemination

Week Four (Lectured on September 22, 2025)

Agent-Based Modeling and Big Data

(a)     Biology, Entomology, and Big Data

(b)    Rule as the Fundamental Unit of ABM

(c)     ABM and Experiments: ABM as a Laboratory

(d)    NetLogo

Week Five (September 29, 2025)

As September 28 is Teachers’ Day (Confucius Day), September 29 will be a make-up holiday, and there will be no classes on that day.

Week Six (October 6, 2025)

As October 6 is the Mid-Autumn Festival, also known as the Full-Moon Festival, there will be no classes on that day.

Week Seven (October 13, 2025)

Models of Social Epidemics (I)

(a) Social Interactions: Social Influences and Social Epidemics

(b) Social Epidemics and Narrative Economics: From Kenneth Boulding to Robert Shiller

(c) Market Sentiment: Model of Social Epidemics

(d) Learning and Adaptation: Kalman Filter Learning and Belief Formation

Week Eight (Lectured on October 20, 2025)

Canonical Agent-Based Model (I): Social Networks, Part 4

(a) Network-Based Agent-Based Models

(b) Spatial Games

(c) The Salient Break (the middle and late 1990s): Causes for Missing Networks

(d) The Second Generation (after the late 1990s)

(e) Small-World Networks and Market Efficiency

(f) Network Topologies and Cooperative Behavior

Week Nine (Lectured on October 27, 2025)

Social Epidemics (II): The Vriend Model of the Effect of Big Data 

(a)    Was Hayek an ACE?

(b)   Rules: Choice-Making, Classifier System and Heuristics

(c)  Wisdom of Crowds and Stupidities of Herds

(d)   Ecology of Rules and Ecological Rationality

Week Ten (Lectured on November 3, 2025)

Reinforcement Learning

(a)     Reinforcement Learning: Origins and Background

(b)    The Multi-Armed Bandit Problem

(c)     Roth-Erev Reinforcement Learning

(d)    Reinforcement Learning in Auction Experiments

Agent-Based Idea and Modeling of Market

(a)     A Spatial Agent Model of Prediction Markets

(b)    What could agent-based markets mean?

(c)     Zero-Intelligence Agents (Entropy Maximization)

(d)    Stylized Facts Accounted: Favorite-Longshot Bias

(e)    The Economics and Psychology of Personality Traits

Week Eleven (Lectured on November 10, 2025)

Agentization: From EBM to ABM

(a) Illustration 1: Lotka-Volterra Equations

(b) Illustration 2: Kermack-Mckendrick (SIR) models

Canonical Agent-Based Model (II): Evolutionary Computation

(a) From Rule Given to Rule Discovery

(b) Three Intellectual Roots of Genetic Algorithms

(c) Representation

(d) GAs as a Model of Social Interactions

(e) Variants of Genetic Algorithms

Week Twelve (Lectured on November 17, 2025)

Autonomous Agents: Agent-Based Lottery Markets

(a)     Why Autonomous Agents?

(b)    Market Design

(c)     Agents

(d)    Autonomous Agents

(e)    Optimal Lottery Tax Rate

Week Thirteen (Lectured on November 24, 2025)

Agentization of Macroeconomic Models (I)

(a) Agentizing Cobweb Models

(b) Cobweb Stability

(c) Agentizing Overlapping-Generation Models

(d) Rational Expectations and Multiple Equilibria

(e) Deficits and Inflation Rate Dynamics

Week Fourteen (Lectured on December 1, 2025)

Agentization of Macroeconomic Models (II)

(a) Agentizing The Kareken-Wallace Model

(b) Exchange Rate Dynamics

(c) Currency Substitution, Currency Collapse and the Single Currency Equilibrium

Week Fifteen (Lectured on December 8, 2025)

Agentization of Macroeconomic Models (III): Asset-Pricing Models

(a) The Grossman-Stiglitz Model

(b) Agentization and the SFI Model (Santa Fe)

(c) Opinion Dynamics: Ising Model as a Social Epidemic Model

(d) Herding-Based Financial Models

Agentization of Macroeconomic Models (IV): Asset-Pricing Models

(a) Equationization of ABM: Heterogeneous-Agent Models

(b) Brock-Hommes Model and Market Fraction Hypothesis

Week Sixteen (Lectured on December 15, 2025)

Agentization of Macroeconomic Models (V): Asset-Pricing Models

(a) Statistical Physics as an Approach to Equationization of ABM

(b) Lux Model

(c) Conclusion of the Class: ABM: What and Why?

The course will be taught in English. The course will proceed in lectures. All lectures are prepared in power points, and the students can get these power points before or after the classes. Students are encouraged to interact with the instructor outside the classes. The students have to read the materials in advance. The lecture will only highlight the ppt. During the class, the students are invited to ask questions based on their readings of the preparatory materials and are also required to answer questions posed to them by the instructor. 40% of the score will be based on the in-class interacting performance of the student. The evaluation of the student performance will be based on the final exam (60%), and in-class interactions (40%).

In this course, your final grade will be determined through an oral examination. You will first make an appointment with me to arrange the exam time. The length of the oral exam will depend on how our exchange unfolds. If, during the conversation, it becomes clear that you are performing very well, I may challenge you with more advanced questions to see if you can reach an even higher level—like climbing to a higher peak. On the other hand, if it becomes apparent that you are struggling, we will not prolong the session unnecessarily, and the exam may end sooner. In either case, the goal is to assess your true potential in a fair and efficient way. Your performance in this exam will determine your final grade. If you are not satisfied with your result after the first attempt, you are welcome to schedule a second oral exam, following the same format.

Aoki M, Yoshikawa H (2006), Reconstructing Macroeconomics: A Perspective from Statistical Physics and Combinatorial Stochastic Processes. Cambridge University Press.

Bookstaber, R. (2017). The end of theory: Financial crises, the failure of economics, and the sweep of human interaction. Princeton University Press.

King, J. E. (2012). The microfoundations delusion: metaphor and dogma in the history of macroeconomics. Edward Elgar Publishing.

King, M., & Kay, J. (2020). Radical uncertainty: Decision-making for an unknowable future. Hachette UK.

Mackay, C. (1852/2012). Extraordinary popular delusions and the madness of crowds. Simon and Schuster.

Miller, J. H., & Page, S. E. (2009). Complex adaptive systems: an introduction to computational models of social life. Princeton university press.

Schelling, T. C. (1978). Micromotives and macrobehavior. WW Norton & Company

Shiller, R. J. (2019). Narrative economics: How stories go viral and drive major economic events. Princeton University Press.

Wilensky, U., & Rand, W. (2015). An introduction to agent-based modeling: modeling natural, social, and engineered complex systems with NetLogo. MIT Press.