Artificial Economics can be defined as ″''a research field that aims at improving our understanding of socioeconomic processes with the help of

computer simulation Computer simulation is the process of mathematical modelling, performed on a computer, which is designed to predict the behaviour of, or the outcome of, a real-world or physical system. The reliability of some mathematical models can be dete ...

''″.Izquierdo, L. R., & Izquierdo, S. S. (2015). Artificial Economics: What, Why and How. Available at SSRN
http://ssrn.com/abstract=2749347
/ref> Like in Theoretical Economics, the approach followed in ''Artificial Economics'' to gain understanding of socioeconomic processes involves building and analysing

formal model In logic, mathematics, computer science, and linguistics, a formal language consists of words whose letters are taken from an alphabet and are well-formed according to a specific set of rules. The alphabet of a formal language consists of sym ...

s. However, in contrast with Theoretical Economics, models in ''Artificial Economics'' are implemented in a programming language so that computers can be employed to analyse them. Concretely, the method followed in ''Artificial Economics'' to analyse

s most often comprises two stages: 1)

deductive Deductive reasoning is the mental process of drawing deductive inferences. An inference is deductively valid if its conclusion follows logically from its premises, i.e. if it is impossible for the premises to be true and the conclusion to be fals ...

generation of samples, and 2)

inductive Induction, Inducible or Inductive may refer to: Biology and medicine * Labor induction (birth/pregnancy) * Induction chemotherapy, in medicine * Induced stem cells, stem cells derived from somatic, reproductive, pluripotent or other cell typ ...

inference of general patterns.Squazzoni, F. (2010). The impact of agent-based models in the social sciences after 15 years of incursions. ''History of Economic Ideas'', 18(2), 197–233. Available a
https://www.jstor.org/stable/23723517
/ref>Izquierdo, L. R., Izquierdo, S. S., Galán, J. M., & Santos, J. I. (2013). Combining Mathematical and Simulation Approaches to Understand the Dynamics of Computer Models. In B. Edmonds & R. Meyer (Eds.), ''Simulating Social Complexity'' (pp. 235–271). Berlin, Heidelberg: Springer Berlin Heidelberg. Available a
http://doi.org/10.1007/978-3-540-93813-2_11
/ref> # The

generation of samples consists in running the model many times for different particularisations of the variables that the model contains. Specifically, if the model is stochastic, then each

run is conducted with a specific realisation of each and every random variable in the model. The result of this first stage is a set of inputs and their corresponding outputs, which have been derived by the computer using pure deduction, i.e. applying to the inputs the

inference rule In the philosophy of logic, a rule of inference, inference rule or transformation rule is a logical form consisting of a function which takes premises, analyzes their syntax, and returns a conclusion (or conclusions). For example, the rule of ...

s that define the model.Axtell, R. (2000). Why agents?: On the varied motivations for agent computing in the social sciences. In ''Proceedings of the Workshop on Agent Simulation: Applications, Models and Tools'': 3-24. Argonne National Laboratory, IL.. Available a
http://www.brookings.edu/es/dynamics/papers/agents/agents.pdf
Izquierdo, L. R., Izquierdo, S. S., Galán, J. M., & Santos, J. I. (2009). Techniques to Understand Computer Simulations: Markov Chain Analysis. ''Journal of Artificial Societies and Social Simulation'', 12 (1) 6. Available a

/ref> # Once a sufficient number of samples have been obtained, an

approach is then employed to infer general patterns about the behaviour of the model. This

process can only lead to probable –rather than necessarily true– conclusions (unless all possible particular instances are explored), since it tries to infer general properties out of particular instances. Thus, using this

approach, the data is produced by the computer using strict deduction, but the general patterns about how the rules of the model transform the inputs into the outputs are inferred using generalisation by induction. The benefit of using the

approach described above (vs. pure

logical deduction Deductive reasoning is the mental process of drawing deductive inferences. An inference is deductively valid if its conclusion follows logically from its premises, i.e. if it is impossible for the premises to be true and the conclusion to be false. ...

only) is that it enables the exploration of (formal) models that are –currently– intractable using the most advanced mathematical techniques. This is so because the set of assumptions that can be investigated using

is not limited by the strong restrictions that mathematical tractability imposes. This point is particularly important in the study of socioeconomic processes, which –due to its complex nature– are oftentimes difficult or impossible to address adequately using a purely

approach only. The strictly

approach often requires so many simplifications to ensure mathematical tractability that the correspondence between the real world and the model assumptions turns out disappointingly weak. Some of these simplifications have been outlined in the left column of the table below, together with some of the features that can be explored using the ''Artificial Economics'' approach (right column).Izquierdo, S. S., Izquierdo, L. R., Galán, J. M., & Santos, J. I. (2016). Economía artificial: una valoración crítica. ''Revista de Métodos Cuantitativos para la Economía y la Empresa'', 22, pp. 36-54. Available at https://www.upo.es/revistas/index.php/RevMetCuant/article/view/2338/1925 The differences in the type of assumptions investigated using the strictly

approach only and those investigated in ''Artificial Economics'' are so fundamental that some scholarsBatten, D. F. (2000). ''Discovering Artificial Economics: How Agents Learn and Economies Evolve''. Boulder, Colorado: Westview Press. see these differences as the defining features of ''Artificial Economics''. Other scholars find that the distinctive characteristic of ''Artificial Economics'' is methodological, i.e. the use of the

approach. The fact that models in ''Artificial Economics'' are implemented in a programming language (rather than expressed as a set of equations) is not considered substantial since any model implemented in computer code can be expressed as a well-defined mathematical function.Leombruni, R., & Richiardi, M. (2005). Why are economists sceptical about agent-based simulations? ''Physica A: Statistical Mechanics and Its Applications'', 355(1), 103–109. Available a
http://doi.org/10.1016/j.physa.2005.02.072
/ref>Epstein, J. M. (2006). Remarks on the Foundations of Agent-Based Generative Social Science. In L. Tesfatsion & K. L. Judd (Eds.), ''Handbook of Computational Economics'' (Vol. 2, pp. 1585–1604). Available a
http://doi.org/10.1016/S1574-0021(05)02034-4
/ref>Richiardi, M., Leombruni, R., Saam, N., & Sonnessa, M. (2006). A Common Protocol for Agent-Based Social Simulation. ''Journal of Artificial Societies and Social Simulation'', 9(1) 15. Available a

/ref>

Artificial Economics Conference Series

One of the aim of these conferences is to favour the meeting of people and ideas coming from two communities of scientists –computer science and economics– in order to construct a more structured multi-disciplinary approach.Artificial Economics Conference Serie
http://www.artificial-economics.org
/ref> Proceedings of every conference in the series have been published as a volume in th

Springer series.

References

{{reflist Economic methods Computational economics