An agent-based model of the housing market

Why agent-based modeling? In the interview below  Doyne Farmer discuses his work with Rob Axtell and John Geanakoplos, who aim to create an agent-based model of the U.S. economy that will people make better understand past, and future, financial crises.

But going back to the question above, why agents? to quote from the SFI website: "Whereas a traditional economic model makes future predictions based on past market behavior and thus fails in unprecedented situations, their agent-based model takes into account the actions of individual decision makers, assigning behavioral rules to each agent in the model"

Agent-based models in Nature

I just came across a few articles in this weeks Nature about the use of agent-based modelling which I found interesting and thought worth sharing.

To quote Nature, "two Opinion pieces explore the promise of Agent-Based Models (ABMs): J. Doyne Farmer and Duncan Foley on what they can do for economics and Josh Epstein on how the models are being used in pandemic planning. In a News Feature, Mark Buchanan finds out what went so badly wrong with the economy and whether ABMs could have predicted the crunch. These pieces are accompanied by an editorial and an interview on the Nature Podcast."

The discussion of ABM is about 13 minutes into the podcast and well worth listening to as it describes ABM and there potential in a simple way.

Modelling Housing Markets

After reading about land markets I come across this simple NetLogo model by Nigel Gilbert et al. The model explores how some of the main features of the English housing market emerges from the interactions between buyers, realtors and sellers (click here to run the model).

There is a paper that accompanies the model (click here) which discusses the potential advantages of agent-based modeling over more traditional 'top down' techniques for exploring the housing market. While the model is not based on any particular geographical location or attempts to represent either the characteristics of individual housing units, nor spatial attributes such as proximity to services. It is still a very interesting paper investigating the complicated interactions that create a housing market in a simple model.

Reference:
Gilbert, N, Hawksworth, J C, and Sweeney, P (2008) 'An Agent-based Model of the UK Housing Market'. University of Surrey http://cress.soc.surrey.ac.uk/housingmarket/ukhm.html or click here to read the paper.

The Urban Experience

Reading up on American cities, I just come across a very interesting book entitled "The Urban Experience: Economics, Society, and Public Policy" by Barry Bluestone, Mary Huff Stevenson and Russell Williams.

The books description: The Urban Experience provides a study of metropolitan areas by combining economic principles, social insight, and political realities with an appreciation of public policy to understand how U.S. cities and suburbs function in the 21st century (click here to read more).