Impact of Qualitative Characteristics on Market Equilibrium: Simulation with Agent-Based Modeling

2017 ◽  
Vol 20 (02) ◽  
pp. 1750013
Author(s):  
Safae Badraoui ◽  
Khalid Bensaid ◽  
Ahmed Mouad El Haloui ◽  
Rajae Aboulaich
Keyword(s):  
Utility Function ◽  
Supply And Demand ◽  
Market Equilibrium ◽  
Ethical Aspect ◽  
Qualitative Characteristic ◽  
Individual Utility ◽  
Agent Based ◽  
Equilibrium Prices ◽  
Equilibrium Market ◽  
The Impact

This paper involves developing financial utility function that considers compliance to a certain qualitative characteristic and studies the impact on market equilibrium prices, should this criterion be Sharia compliance, fair-trade, environmental, social and governance principles or other ethical aspect. The goal is to show that individual utility can depend on other parameters than wealth and risk aversion, that therefore influence equilibrium market prices. This has been done by examining a possible utility function that takes into account individual sensitivity to the criterion and the intrinsic quality of compliance of this parameter. In order to prove the effectiveness of the proposed utility function, a simulation is made using agent-based approach with NetLogo platform. Upon examination of the impact of these parameters, it becomes clear that compliance to a qualitative characteristic would impact individual utility, supply and demand and result in equilibrium prices. This research highlights the importance of ethical arguments on individual decision making and how markets behave to this.

An Agent-Based Model to Forecast the Inflation Rate in the Eurozone

2017 ◽  
pp. 72-92
Author(s):  
Juan Luis Santos ◽  
Jagoda Anna Kaszowska ◽  
Tomás Mancha Navarro
Keyword(s):  
Financial Institutions ◽  
Inflation Rate ◽  
Phillips Curve ◽  
Supply And Demand ◽  
Single Agent ◽  
Market Equilibrium ◽  
Agent Based Model ◽  
Agent Based ◽  
Long Run ◽  
Inflation Rates

The aim of the agent-based model presented in this chapter is to explain the determinants of inflation and to forecast the inflation rate in the Eurozone for the next five years. The behaviors of agents and their expectations are interrelated and explained by macroeconomic models applied to heterogeneous agents of three classes: individuals, companies and financial institutions. In addition, the behavior of public sector and central bank is also modeled with a single agent of each kind. Once the quantitative easing policy is implemented, the quantitative theory of money expects higher inflation rates in the long run. Inflation should remain low taking into account the Phillips-Curve. Last, according to the Aggregated Supply and Demand as well as to the Money Market equilibrium, the behaviors modeled allow forecasting low inflation. However, an external shock, as it would be an increase in the price of important commodities, can alter the inflation rate to a great extent.

scholarly journals Value and Prices in a Reinsurance Market

1979 ◽  
Vol 10 (3) ◽  
pp. 263-273 ◽  
Author(s):  
Flavio Pressacco
Keyword(s):  
Utility Function ◽  
Intrinsic Value ◽  
Market Equilibrium ◽  
Economic Problem ◽  
Point Of View ◽  
Equilibrium Prices ◽  
State Of Nature ◽  
Classical Economic ◽  
Reinsurance Market

This paper concerns the Borch model of a reinsurance market seen as a model of an economy under uncertainty.In a market of this type the goods traded are unit coverings contingent to a particular state of nature (n-tuple of claims).Our idea is to regard the probability of a state of nature as a sort of intrinsic value of the related contingent covering. From this point of view we examine the role of the reinsurance market in modifying values in market equilibrium prices and other questions, related to this classical economic problem, in the particular case of a quadratic utility function for all companies.

scholarly journals Estimating Strawberry Attributes’ Market Equilibrium Values

HortScience ◽  
2017 ◽  
Vol 52 (5) ◽  
pp. 742-748
Author(s):  
Jong Woo Choi ◽  
Chengyan Yue ◽  
James Luby ◽  
Shuoli Zhao ◽  
Karina Gallardo ◽  
...  
Keyword(s):  
Demand Curve ◽  
Supply And Demand ◽  
Mixed Logit ◽  
Market Equilibrium ◽  
Mixed Logit Model ◽  
Logit Models ◽  
Total Revenue ◽  
Mixed Logit Models ◽  
Equilibrium Prices ◽  
Social Surplus

We conducted choice experiments with both strawberry producers and consumers. Consumer and producer willingness to pay (WTP) for the fruit attributes were estimated using mixed logit models. Through simulation using the mixed logit model results, we derived the market equilibrium prices, supply and demand curve, as well as quantities demanded and supplied for every fruit attribute. We found the highest equilibrium price was for strawberry internal color followed by flavor. Strawberry breeders can use the information when setting breeding targets, allocating resources appropriately during their breeding process and focusing on the improvement of attributes that produce the highest social surplus and total revenue.

Seeding the Herd: Pricing and Welfare Effects of Social Learning Manipulation

2021 ◽  
Author(s):  
Li Chen ◽  
Yiangos Papanastasiou
Keyword(s):  
Social Learning ◽  
Observational Learning ◽  
Operations Management ◽  
Welfare Effects ◽  
Unintended Consequences ◽  
Market Outcomes ◽  
Equilibrium Prices ◽  
Recent Emergence ◽  
Equilibrium Market ◽  
The Impact

This paper is motivated by the recent emergence of various interference tactics employed by sellers attempting to manipulate social learning. We revisit the classic model of observational social learning and extend it to allow for (i) asymmetric information on product value between the seller and the consumers and (ii) the ability of the seller to “seed” the observational learning process with a fake purchase, in an attempt to manipulate consumer beliefs. We examine the interaction between social learning manipulation and equilibrium market outcomes as well as the impact of antimanipulation measures aimed at detecting and punishing misconduct. The analysis yields three main insights. First, we show that increasing the intensity of antimanipulation measures can have unintended consequences, often inducing higher levels of manipulation as well as higher equilibrium prices. Second, we find that although measures of high intensity can completely deter misconduct, such measures do not lead to any improvement in either seller or consumer payoffs, relative to the case where no measures are present. Third, we demonstrate that in many cases, measures of intermediate intensity can leverage seller manipulation to simultaneously improve both seller and consumer payoffs. This paper was accepted by Jayashankar Swaminathan, operations management.

scholarly journals Spatial market equilibrium in the case of linear transportation costs

2020 ◽  
Vol 16 (4) ◽  
pp. 447-454
Author(s):  
Alexander Y. Krylatov ◽  
◽  
Yulia E. Lonyagina ◽  
Ruslan I. Golubev ◽  
◽  
...  
Keyword(s):  
Nonlinear Optimization ◽  
Supply And Demand ◽  
Market Price ◽  
Market Equilibrium ◽  
Transportation Costs ◽  
Unique Equilibrium ◽  
Optimization Program ◽  
Equilibrium Prices ◽  
Dual Variables

In this article, we study the spatial market equilibrium in the case of fixed demands and supply values, the requirement of equality in regard to overall supply and overall demand, and linear transportation costs. The problem is formulated as a nonlinear optimization program with dual variables reflecting supply and demand prices. It is shown that the unique equilibrium commodity assignment pattern is obtained explicitly via equilibrium prices. Moreover, it is proved that in order to obtain absolute values of equilibrium prices, it is necessary to establish a certain base market price. Therefore, once the base market price is given, then other prices are adjusted according to spatial market equilibrium.

scholarly journals V–, U–, L– or W–shaped economic recovery after Covid-19: Insights from an Agent Based Model

PLoS ONE ◽  
2021 ◽  
Vol 16 (3) ◽  
pp. e0247823
Author(s):  
Dhruv Sharma ◽  
Jean-Philippe Bouchaud ◽  
Stanislao Gualdi ◽  
Marco Tarzia ◽  
Francesco Zamponi
Keyword(s):  
Supply And Demand ◽  
Economic Recovery ◽  
Output Curve ◽  
Agent Based Model ◽  
Demand Shock ◽  
Agent Based ◽  
Access To Credit ◽  
Output Loss ◽  
On Line ◽  
The Impact

We discuss the impact of a Covid-19–like shock on a simple model economy, described by the previously developed Mark-0 Agent-Based Model. We consider a mixed supply and demand shock, and show that depending on the shock parameters (amplitude and duration), our model economy can display V-shaped, U-shaped or W-shaped recoveries, and even an L-shaped output curve with permanent output loss. This is due to the economy getting trapped in a self-sustained “bad” state. We then discuss two policies that attempt to moderate the impact of the shock: giving easy credit to firms, and the so-called helicopter money, i.e. injecting new money into the households savings. We find that both policies are effective if strong enough. We highlight the potential danger of terminating these policies too early, although inflation is substantially increased by lax access to credit. Finally, we consider the impact of a second lockdown. While we only discuss a limited number of scenarios, our model is flexible and versatile enough to accommodate a wide variety of situations, thus serving as a useful exploratory tool for a qualitative, scenario-based understanding of post-Covid recovery. The corresponding code is available on-line.

Demand and Supply

2017 ◽  
Author(s):  
George C. Davis ◽  
Elena L. Serrano
Keyword(s):  
Food System ◽  
Supply And Demand ◽  
Market Equilibrium ◽  
Caloric Intake ◽  
Sugar Sweetened Beverages ◽  
Market Prices ◽  
Demand And Supply ◽  
Equilibrium Prices ◽  
Sweetened Beverages ◽  
Demand Curves

Chapter 14 introduces the ideas of consumer and producer sovereignty and addresses the questions: Who determines the prices and quantities of food in our food system? Consumers? Producers? Both? The chapter demonstrates that market prices and quantities occur where consumers and producers come together in the market as represented by the market supply and demand curves. The chapter shows how changes in demand and supply will affect prices and quantities in the market. Using the demand and supply framework, the chapter analyzes the expected impact of a proposed tax on sugar sweetened beverages to decrease caloric intake. The chapter ends with a demonstration and discussion of the effects of multiple changes in demand or supply on the market equilibrium prices and quantities.

Estimation of market equilibrium values for apple attributes

2018 ◽  
Vol 10 (1) ◽  
pp. 135-151 ◽  
Author(s):  
Jong Woo Choi ◽  
Chengyan Yue ◽  
James Luby ◽  
Shuoli Zhao ◽  
Karina Gallardo ◽  
...  
Keyword(s):  
Consumer Preferences ◽  
Supply And Demand ◽  
Mixed Logit ◽  
Market Equilibrium ◽  
Breeding Programs ◽  
Content Type ◽  
Mixed Logit Models ◽  
Equilibrium Prices ◽  
Demand Curves ◽  
Social Surplus

Purpose Development of new cultivars requires extensive genetic knowledge, trained personnel, and significant financial resources, so it is crucial for breeders to focus on the attributes most preferred by the key supply chain stakeholders such as consumers and producers. The purpose of this paper is to identify which attributes generate the highest total revenue or social surplus, information that breeders can take into account as they allocate resources to focus on attributes in their breeding programs. Design/methodology/approach This study used mail-in and online surveys to collect consumer and producer choice experiment data, and then employed mixed logit models to analyze and simulate individual producer and consumer willingness to pay (WTP) for the apple attributes. Findings Based on the simulation results, this study derived the supply and demand curves and the market equilibrium prices and quantities for each apple attribute. Based on the WTP analysis for both consumer and producer, this paper found the highest equilibrium price and welfare for apples come from crispness, followed by flavor. Originality/value The authors propose a framework to estimate the equilibrium prices and quantities of a product based on the results of choice experiments. The framework can be easily adapted to understand any countries’ producer and consumer preferences for certain products.

The impact of regulations on labor markets in the U.S.

2019 ◽  
Vol 1 (1) ◽  
pp. 36-40
Author(s):  
Souad Adnane
Keyword(s):  
Supply And Demand ◽  
Demand Model ◽  
Lead Teachers ◽  
Associate's Degree ◽  
Childcare Workers ◽  
Educational Requirements ◽  
The Cost ◽  
Women's Labor Force Participation ◽  
The Impact ◽  
The U.S

The District of Columbia (DC) Office of the Superintendent of Education (OSSE) issued in December 2016 new educational requirements for childcare workers, according to which, all childcare center directors in the District must earn a bachelor’s degree by December 2022 and all lead teachers an associate’s degree by December 2020 (Institute for Justice, 2018). Moreover, DC has one of the lowest staff-child ratios in the country. How are regulations pertaining to childcare workers’ qualifications and staff-child ratio affecting the childcare market in DC? The present paper is an attempt to answer this question first by analyzing the effects of more stringent regulations on the cost and availability of childcare in the U.S based on existing studies. It also uses the basic supply and demand model to examine the possible impact of the new DC policy on the cost, quality and supply of childcare in the District and how it will affect working parents, especially mothers. Next, the paper discusses the impact of deregulation based on simulations and regressions conducted by studies covering the U.S., and implications for quality. It concludes that more stringent childcare regulations, regarding educational requirements and staff-child ratios, are associated with a reduced number of childcare centers and a higher cost, and eventually affects women’s labor force participation.

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