Exploring Narrative Economics: An Agent-based-modeling Platform that Integrates Automated Traders with Opinion Dynamics

Kenneth Lomas, Dave Cliff

2021

Abstract

In seeking to explain aspects of real-world economies that defy easy understanding when analysed via conventional means, Nobel Laureate Robert Shiller has since 2017 introduced and developed the idea of Narrative Economics, where observable economic factors such as the dynamics of prices in asset markets are explained largely as a consequence of the narratives (i.e., the stories) heard, told, and believed by participants in those markets. Shiller argues that otherwise irrational and difficult-to-explain behaviors, such as investors participating in highly volatile cryptocurrency markets, are best explained and understood in narrative terms: people invest because they believe, because they have a heartfelt opinion, about the future prospects of the asset, and they tell to themselves and others stories (narratives) about those beliefs and opinions. In this paper we describe what is, to the best of our knowledge, the first ever agent-based modelling platform that allows for the study of issues in narrative economics. We have created this by integrating and synthesizing research in two previously separate fields: opinion dynamics (OD), and agent-based computational economics (ACE) in the form of minimally-intelligent trader-agents operating in accurately modelled financial markets. We show here for the first time how long-established models in OD and in ACE can be brought together to enable the experimental study of issues in narrative economics, and we present initial results from our system. The program-code for our simulation platform has been released as freely-available open-source software on GitHub, to enable other researchers to replicate and extend our work.

Paper Citation

in Harvard Style

Lomas K. and Cliff D. (2021). Exploring Narrative Economics: An Agent-based-modeling Platform that Integrates Automated Traders with Opinion Dynamics.In Proceedings of the 13th International Conference on Agents and Artificial Intelligence - Volume 1: ICAART, ISBN 978-989-758-484-8, pages 137-148. DOI: 10.5220/0010337101370148

in Bibtex Style

@conference{icaart21,
author={Kenneth Lomas and Dave Cliff},
title={Exploring Narrative Economics: An Agent-based-modeling Platform that Integrates Automated Traders with Opinion Dynamics},
booktitle={Proceedings of the 13th International Conference on Agents and Artificial Intelligence - Volume 1: ICAART,},
year={2021},
pages={137-148},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0010337101370148},
isbn={978-989-758-484-8},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 13th International Conference on Agents and Artificial Intelligence - Volume 1: ICAART,
TI - Exploring Narrative Economics: An Agent-based-modeling Platform that Integrates Automated Traders with Opinion Dynamics
SN - 978-989-758-484-8
AU - Lomas K.
AU - Cliff D.
PY - 2021
SP - 137
EP - 148
DO - 10.5220/0010337101370148