How To Cook A Provide Curve?

I did a chip of the software plumbing for my economic/financial agent-based simulator over the holidays. I got a lot of the primal architecture inwards place, I simply postulate to start the difficult component -- adding inwards agent behaviour. I am firstly working on a stripped-down economical model, in addition to postulate to figure out how to laid upwards a furnish curve. Suggestions are welcome...

Simplest Possible Economy

I decided to laid on the simplest possible "economy" for the simulator. The firstly simplification is that production takes house without a labour input; intend of it every bit a robotic economy. The agents are a relatively modest discover of firms (ten or so). There are 2 commodities inwards the economy: goods in addition to capital.

As 1 mightiness expect, firms tin utilization uppercase to either:

• produce goods; or
• produce to a greater extent than capital.

Production is based on a uncomplicated production function, in addition to takes time. In club to receive anyone alongside a mainstream economical pedagogy crazy, production shows an increasing render to capital. This is fake past times it taking v units of uppercase to practise an administrative unit of measurement to handle the production of either goods or capital, acre firms start alongside twenty units of capital. In other words, if a work solid wants to attain both goods in addition to capital, it would necktie upwards 10 out of twenty units inwards overhead. After that, production linearly increases every bit a role of the amount of uppercase used for production.

(There volition in all probability last a fixed dollar cost per employed unit of measurement of capital, to stand upwards inwards for wages. This helps necktie downwardly the toll degree inwards dollar terms.)

Demand for goods is created past times the regime periodically sending inwards a fixed listing of bids for goods, alongside bids at lower in addition to lower prices. This creates an arbitrary terminal need curve. (I direct hold no built the regime yet.)

The objective for firms is to maximise their "score." Every dollar of dividends they pay increases their score past times 1, in addition to the score itself volition chemical compound at a fixed rate. In other words, firms are trying to maximise the acquaint value of their dividend stream. (I direct hold non added this score-keeping role yet.)

Firms are forced to kicking the bucket on a positive cash residual at all times, to avoid the (private equity) tactic of borrowing a gazillion dollars to pay a huge initial dividend. I volition eventually direct hold systems to handle work solid borrowing, but they are non inwards place, in addition to I desire to larn a working simulation earlier worrying most every conceivable bell in addition to whistle that could last added.

So the query in addition to then becomes: what are the "optimal" tactics for firms? They postulate to decide:

• production, which happens inwards existent time,
• at what prices in addition to volumes are orders post to the exchange?

In particular, at that spot is an incentive for specialisation: firms volition either attain goods or capital, but non both. The firms producing uppercase direct hold to promise that other firms volition purchase uppercase from them, whereas goods-producing firms know that the regime is providing a fixed terminal need schedule. However, the primal work is determining the selling toll of goods, every bit that helps pivot downwardly the value of capital.

Meanwhile, things are complicated past times the fact that the simulation is essentially happening inwards continuous time. Agents direct hold to brand decisions based on marketplace quotes which may direct hold changed past times the fourth dimension they direct hold made their decision. Furthermore, at that spot may non last whatever marketplace quotes inwards beingness nonetheless (which is what volition move on inwards the starting fourth dimension of the simulation). (The regime need schedule is assumed to last known, hence that volition provide closed to initial guidance for marketplace prices.)

My principal efforts volition last going dorsum to aspect at my inflation-linked bond report, in addition to hence this projection volition simmer on the dorsum burner. However, if whatever readers direct hold suggestions on how to construction behavioural rules, I am opened upwards to suggestions. (The code is opened upwards source, but I uncertainty that anyone other than myself tin figure it out correct now. For experimental work, I code first, document later.) I tin show hacking closed to code together when I desire to direct hold a break.

(c) Brian Romanchuk 2018