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NESS Newsletter NUMBER
4
This number 4 of the NESS Newsletter presents an interesting interview with Alan Kirman, that took place at the NESS Grand Challenges workshop reported last month.
Interview with Alan Kirman NESS interviewed Alan Kirman at the NESS Grand Challenges workshop that was held in Brussels at the end of March 2012. Alan Kirman is Professor Emeritus at the UniversitĂŠ
Paul Cezanne in Aix-en Provence, Director of Studies at the Ecole des Hautes Etudes en Sciences Sociales (EHESS) and ...
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COMPLEXITY SCIENCE AND SOCIAL 4TH WORLD CONGRESS ON SOSCIENCE AT THE INTERFACE TO CIAL SIMULATION THE REAL WORLD CONFERENCE Social sciences are moving in a direction in Coping with the global-scale challenges of which their various constituent parts are sharing a common set of foundations, financial instability, food security, climate languages and platforms, ... change, sustainability, ... (read more inside) WWW.NESSNET.EU
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INTERVIEW WITH ALAN KIRMAN NESS interviewed Alan Kirman at the NESS Grand Challenges workshop that was held in Brussels at the end of March 2012. Alan Kirman is Professor Emeritus at the Universite Paul Cezanne in Aix-en Provence, Director of Studies at the Ecole des Hautes Etudes en Sciences Sociales (EHESS) and member of the Institut Universitaire de France. He studied at Oxford University and obtained his Ph.D in economics from Princeton. He has been professor at Johns Hopkins University, Université Libre de Bruxelles, the University of Warwick and at the European University Institute in Florence. His main interest is in the way in which markets and their participants actually function and the link between micro and macro behaviour. The interview was conducted by Paul Ormerod.
Paul Ormerod and Alan Kirman at the NESS Grand Cha"enges workshop, March 2012
very good reputation with the mainstream, but you have been really a fundamental critic of the mainstream approach for a long time. I wonder if you could just describe how someone like yourself, with these mathematical skills, came to that position.
Alan Kirman - I think the key was the actual moment that I realized that this was just somehow not right, when SonnenscheinMantel-Debreu produced NESS - You’ve done very their famous results, which distinguished work in show you essentially that if Economics, and a lot of it is we approach Economics in highly technical and highly the mathematical, so you have a WWW.NESSNET.EU
way we have done in the past, which is saying I only want to make assumptions on individuals, I don’t worry about anything about the structure of the relationship between the individuals, just make assumptions about individuals, and then aggregate up and see whether we can show that there is an equilibrium in the sense that the markets would create, that the equilibrium would be stable in the sense that if we are not there, the Economy will come to that and the equilibrium will be unique so we can say something about what happens if we move something. PAGE 2
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When they show that the try to say what is it that Debreu theorems were your only thing we can prove is you’re seeing there that will sort of “road to Damascus”. that equilibrium exists and need me to build a theory not that it was stable, not which will explain what’s Alan Kirman - That’s right. that it was unique under the happening. Here we seem to usual assumptions, then you have gotten into an almost set yourself up, unless I’m autistic situation, where we NESS - Although these may going to believe that the just build on the basis of our be very obscure, I mean, system is all the time in introspection and what we you’re correct that this equilibrium, somehow got needed for the represents an absolutely there and will never move Mathematics, so we got fundamental challenge to from there, then this is not better and better getting mainstream academics, but a satisfactory explanation more and more general these results have been about what is going on in mathematical models, that known since 30 years ago. the world and so I became told us less and less about disillusioned at that point. the economic phenomena Alan Kirman - 1974. Or But I have to admit that and in the end that’s all we 1972-74. beforehand, I kept having are interested. this sort of feeling that NESS - So, these things we forty years ago. were doing Perhaps you were too might speculate abstract, too as to why, unreal, that all because most our economists assumptions now were ever came simply not from taught these introspection, results and so not from they careful disappeared, observation of even though Alan Kirman at the NESS Grand Cha"enges workshop, March 2012 what people they were are doing. produced by highly mathematical In other fields, you observe NESS - So the economists themselves, the facts, you observe Sonnenschein-Mantelpublished in the very top what’s happening and you
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mainstream journals. Why do you think these have disappeared from the teaching of Economics?
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should really think, rethink all of this.
it? Well you assume that the Economy as a whole acts I think what’s happened is 2 like one individual, that gets rid of your problem of unique equilibrium. So, stability, let´s also get rid of that. If you got an Economy with one agent, you just look at what happens in equilibrium, don’t worry about how it got there, because this one individual, what can he be doing? He can´t be trading with anybody else or doing anything.
So I think that that’s the answers that Alan Kirman at the NESS Grand Cha"enges workshop, March 2012 macroeconomics took up the label of general things: one is that general equilibrium, but it’s not equilibrium as such, as it general equilibrium in the Alan Kirman - Well, it’s an sense of what it used to be, interesting question because was then, is simply not taught anymore really, I and that tradition, as a if you look at the people mean you do find courses in result of Sonnenscheinconcerned, Rolf Mantel Mantel-Debreu, faded away, who unfortunately died, but Mathematic Economics where it’s part of it, but it’s but it’s not that we actually Gerhard Debreu, Nobel basically not taught went up to a set of people prize for his work on anymore. The other thing is saying “we have to rethink general equilibrium, Hugo that people, having seen the this, because of this”, or just Sonnenschein, a leading dangers of this, just simply said “oh, better not teach mathematical economist tried to get rid of them. them that anymore because who became the editor of Macroeconomists call their we see that this doesn’t lead Econometrica, how come models general equilibrium anywhere”. But it only that these people, having didn’t lead anywhere for seen this, that the weight of models but they’re not general equilibrium models those people who really their reputation didn’t because they don’t have understood what was going somehow manage to many agents and so forth on. The rest just took the persuade people that we and how do you get out of ball and ran with it in a
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different direction.
action is in between. That’s are behaving. And on the what we should be looking other side I think that the in the system and how it Sonnenschein-MantelNESS - So, your thinking operates. And in so many Debreu results show us that now is that things like time systems, Biology, in physical the aggregate does not and process and describing systems, what you see is behave like an individual. through looking at the that a system of interacting So, somehow this structure facts, as well as interfacing particles is not going to is being tacked from both with theory, what takes behave like the average sides, both from the axioms place in equilibrium, would particle, it has different of rationality and from you see that as an important behavior, and that’s what we macro-micro. People are basis for getting more need to explain, how does still working on networks understanding of the the system coordinate itself. and so forth but it’s Economy? I think we’ve put so much considered to be not an emphasis on the efficiency integral part of the central Alan Kirman - Yes, I think 2 and the optimization and core of Economics. Now things. I would say that that’s not how most people very good people like Matt time, evolution and the are really behaving. Jackson and Sanjeev Goyal, changes in Economy, Behavioral Economics, on they work on networks, but changes in people’s one side, says to us the this is not somehow behavior, the fact that assumptions you make integrated in the main nothing is really fixed, and about individuals don’t structure and it should be, the whole system is correspond to the way they it’s essential. constantly evolving, the individuals within it, the rules that govern them, I think all of that we should be taking that into account, and not thinking of it in terms of a static equilibrium or conversion to a static equilibrium, that ´s the first thing, and the second thing is that we’ve got trapped into the micro against macro, and then, how do we get from one to the other, so we just assume Alan Kirman at the NESS Grand Cha"enges workshop, March 2012 that macro behaves like the micro, but in fact, all of the
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Alan Kirman at the NESS Grand Cha"enges workshop, March 2012
NESS - So, in a sense it’s really quite remarkable that there has been a vast explosion of knowledge about networks, both theoretical and empirical, which is influencing a whole range of scientific disciplines, and yet, as you say, economics again remains completely impervious, so I think this raises, as you mentioned, fundamental critiques from within it, and it raises a more general question, do you think, given the extents that Economics is itself capable of being reformed from within or does it need a sort of pythonic squeeze, to squeeze it out of existence, from the outside?
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Alan Kirman - That is a strange question because if you go to central banks, go to people who have to make policy, make decisions, they are really interested in alternative approaches, they ask for them, Trichet asks for them, Bernanke asks for them. All these people are saying they are open to different approaches, but the profession doesn’t seem to be hearing them and that is very curious. But I think if you talk to people in the profession, a lot of them will say, like Mike Woodford, who’s after all one of the central figures of standard Macroeconomics, he worked on how groups can learn to coordinate on
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believing in sunspots and not believing in the fundamentals. He also worked on selforganizing criticality. So, there are people who are open to the other things, but the typical reaction is to say “what you put your finger on is interesting, we’ll try to incorporate it into our model”. So what we do is we take our model and we bend it, twist it, and we put in an imperfection, imperfect information, asymmetries and so forth and we try to incorporate them into the existing model. It’s not “should we rethink the whole model, the structure?” Start with all these interactions as a central part and work from there or should we constantly try to adapt the standard model to these difficulties. NESS - Your work suggests that we really need to rethink, we need to have a different view that places interactions right at the center of any theoretical approach which we have.
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Alan Kirman - That’s right, I think that’s what we should do. We should think of this as an interacting system, which is evolving itself and the way people behave within this will evolve all the time because that’s not something people are hearing, because behind the said standard models
adapt to the people, to the way people are behaving. People always learn how to get around the rules and then after a while you have to modify the rules as a function of that. So, having a set of rules for the market is an invitation for them, the people who (…) in the markets to get around the
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reacting to what’s going on in the system, and that’s not something people are happy with, because they say “Who are these people who are going to do this reacting?” and “Why are they more intelligent than the actors in the market?” and so forth. So I think you get this reaction, particularly an ideological reaction, that is, people want to believe that markets are self-equilibrating, self-sustaining, if only we leave them alone, they’ll do the job and I think that people are very reluctant to drop that, and that’s for an ideological reason, not for a theoretical reason.
Alan Kirman at the NESS Grand Cha"enges workshop, March 2012
NESS - So finally, an impossible question really, there’s also implicitly not rules. But that’s what because obviously we should only a philosophy but an markets want. They say be drawing inspiration from ideology. So, if you start to “Write down the charters, say things like that, then we want to obey”, but then a whole range of sciences and disciplines, but if you you can’t lay down a set of of course they just got to had to advise a young rules and say “If only we find some way of taking a economist which other write down the good set of bank, then create an rules, and the markets obey organism that’s not actually discipline to look at to draw them, then everything will technically a bank, and then inspiration, and I think you can include Economic work ok”. Because the put assets into it. And you History in this question, problem is, with these sort say, “Well, we’re going to of systems, the rules have to rule that out”, but you have because it has become divided, would you advise, I be changing all the time, to to constantly be reflexive,
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mean you would advise to look at a lot, but if you just had to advise one, would it be Economic History, Biology, Physics, where would you point the young economist to look at, outside mainstream Economics for inspiration?
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but they’re not doing it the best possible way. Somebody could be an advisor to those ants and tell them what to do and they’d do it better. Deborah Gordon, the entomologist at Stanford, she said that if you believe that these things are optimal and apt and they’re behaving optimally, just watch them for a few weeks. You wind up wanting to help them, they’re just doing a bad job, “if only I could just help you do that”, but somehow they build these structures, they survive and the structures are rather robust. So it’s not whether this is all optimal or anything, it’s really how a system coordinates itself and how it survives and those are the things that are interesting in economic science. Yes, Biology is what I think I would go for.
would have gone on with Marshall and say that perhaps Biology is the thing that’s more interesting for us because physical systems, you can think of them as having the laws and being relatively well defined. Biology ecosystems are more complicated, they Alan Kirman - That’s a have all these feedbacks and tricky question. so forth, and I think that one of the most important NESS - Well, I wanted to lessons that I have learned, catch you out at the end, much too late, I have always you see… been interested in insects, you know, from entomology Alan Kirman - I wanted to we’re always being told that these organisms have say, you should surely look NESS - Thank you very at the history of Economics, optimally adapted and so so you should surely look at forth and that they are well much. organized and they have Economic History, you reached an optimum state should surely look at and what you observe is Physics, because that’s Interview: Paul Ormerod where a lot of the tools are that they’re not, they’re a Edition: Jorge Louçã, Françoise but, in a sentence, I think I mess. These systems Bourchenin and Bruno Gaminha collectively get a job done,
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CONFERENCES
Complexity Science and Social Science at the Interface to the Real World Conference 24th and 25th September 2012
Call for Papers and Participation Coping with the global-scale challenges of financial instability, food security, climate change, sustainability, demographic change and migration, pervasive web technology, transnational governance and security, among others, will involve dealing with large-scale complex systems made up of many parts interacting and adapting in sometimes subtle ways. People are critically important components of all of these systems, which makes studying such systems a topic for social science as well as for natural science and engineering. However, the issues transcend disciplinary boundaries and making progress will require a significant interdisciplinary effort. Much of the research that is required to address these issues is taking place at a new interface, where collaboration between economists, demographers, sociologists, etc., is supported and catalysed by tools and concepts from the physical sciences, mathematics, computer science and engineering. In the same way that research at the life and physical sciences interface has revolutionised biology and medicine since the turn of the century, research at the social sciences interface has the potential to transform our ability to answer questions about social, socio-economic, socio-ecological and sociotechnological systems. Contributions in the form of papers of 2500 – 8000 words reporting work that straddles the interface between complexity science and social science are invited. The intention is that a collection of papers will be published after the conference as a special issue of a prestigious journal. Papers describing applications are especially welcomed. There will also be an opportunity to present posters. http://www.csrw.ac.uk/events-hosted/complex-interface-conference-2012
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CONFERENCES
AMPLE'12 - 2nd International Workshop on Agent-based Modeling for Policy Engineering co-located with ECAI 2012 (Montpellier, August 27-31, 2012)
AMPLE'12 is the second AMPLEworkshop, building on the first edition held co-located with AAMAS'11 (Taipei, Taiwan), and joining forces with the congenial ABSSS-workshop (Agent Based
economists, political scientists and sociologists, and policy makers have been using agent-based models to develop a better understanding of their problem domains and make better decisions. A
Simulations for a Sustainable Society), which held its first edition in November 2011, as part of the PRIMA conference (Wollongong, Australia).
particularly important and timely aspect of this work is the design of sustainable policies. We will therefore have a special track focusing on sustainability in agentbased modeling for policy This year the workshop will be held at engineering. Policies for sustainable the European Conference on Artificial development require complex decisions Intelligence (ECAI) which will take place about resource management, balance of in Montpellier, France, August 27-31. economic, environmental and societal Socio-technical systems are complex needs and involve many countries, interest adaptive entities in which social systems groups and individuals. Especially for and technologies co-evolve. To attain sustainable societies we are interested in policy goals in such an environment, social simulations that can capture the behavioral and technical elements require to be put to patterns, changes and interactions in a use in a combined way. In order to society. This requires large scale understand, analyze and design such simulations with relatively rich cognitive complex systems, advanced tools are agents. required. One of the major tools for understanding socio-technical systems is Paper Submission: 28 May 2012 agent-based modeling. In recent years, Web: http://ample2012.tudelft.nl/ social scientists from all domains, including
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CONFERENCES
4th World Congress on Social Simulation September 4-7, 2012 National Chengchi University, Taipei
Social sciences are moving in a direction in which their various constituent parts are sharing a common set of foundations, languages and platforms, which makes the social sciences be unprecedentedly behavioral, algorithmic and computational. At the turn of the 21st century, a group of computer scientists and social scientists worked together to initiate new series of conferences and to establish new academic organizations to give momentum to this emerging integration now known as computational social sciences. Among the largest of such conferences, WCSS is sponsored by the three regional scientific associations on social simulations: ESSA (the European Social Simulation Association), PAAA (Pacific Asian Association for Agent-based Approach in Social Systems Sciences) and CSSS (Computational Social Science Society, US). It aims at bringing together researchers and practitioners from diverse fields on social simulations, whether theoretical, experimental, practical, or technical, to present the latest results of various researches and to discuss emergent phenomena and modeling issues of a variety of research subjects related to social simulations, which will provide further understanding on social complex problems.
www.aiecon.org/conference/wcss2012
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CONFERENCES
The Computational Social Science Society of the Americas 18-21 September 2012, Santa Fe The annual conference of the Computational Social Science Society of the Americas (CSSSA) will be held in Santa Fe, New Mexico, September 18th-21st, 2012. Computational Social Science (CSS) is a scientific discipline where computational methods and simulation
models of social dynamics oer new insights into social phenomena beyond what is available with traditional social science methods. The CSSSA 2012 Conference will bring together international practitioners of CSS to present peer reviewed research via computational social science methods.
CompNet 2012 Complex Networks and their Applications 26 November 2012, Sorrento - Naples Real-world entities often interconnect with each other through explicit or implicit relationships to form a complex network. Examples of complex networks are found in many fields of science such as biological systems, engineering systems, economic systems as well as social systems. In line with 's tradition of SITIS promoting interdisciplinary research, the international workshop on Complex Networks and their Applications (CompNet 2012) aims at bringing together researchers and practitioners from dierent science communities working on areas related to complex networks. The workshop targets two types of contributions from prospective authors: contributions dealing of theoretical tools and methods to solve practical problems as well as applications solved by tools from network sciences. Both contributions should stimulate interaction between theoreticians and practitioners. General Chair: Hocine Cherifi , University of Burgundy , France If you have any queries, please email at hocine.cherifi@u-bourgogne.fr
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SUMMER SCHOOLS
Lipari School on Computational Complex Systems July 14 - July 21, 2012, Lipari Island The 2012 edition addresses PhD students and young researchers to the forefront of research activity on data mining and modeling of complex techno-
socio-economic systems. Recognized authorities in the field will give formal lectures tailoring these for an interdisciplinary audience. Participants will also have the opportunity to present the results of their research during a short communication session. As a whole, the planned summer school will allow participants to be exposed to cutting edge results in one of the most challenging research area, while at the same time enjoying the relaxing atmosphere of one of the most beautiful italian islands. http://lipari.dipmat.unict.it/LipariSchool/ ComplexSystems/
NECSI Summer and Winter School June 2012, MIT Week 1: June 4-8 CX201: Complex Physical, Biological and Social Systems Lab: June 10 CX102: Computer Programming and Complex Systems Week 2: June 11-15 CX202: Complex Systems Modeling and Networks NECSI's Summer and Winter Schools oer two intensive week-long courses. The courses consist of lecture and supervised group projects. http://necsi.edu/education/ school.html WWW.NESSNET.EU
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JOURNALS
The Knowledge Engineering Review Volume 27 - Special Issue 02 on Agent-Based Computational Economics - June 2012 http://journals.cambridge.org/action/displayIssue?decade=2010&jid=KER&volumeId=27&issueId=02
TABLE OF CONTENTS
Giorgio Fagiolo and Andrea Roventini
The special issue: agent-based computational economics—overview
Agent-based economic models and econometrics
Robert E. Marks and Nicolaas J. Vriend
Shu-Heng Chen and Chia-Ling Chang and Ye-Rong Du
Analysis and synthesis: multiagent systems in the social sciences
Agent-based models and hypothesis testing: an example of innovation and organizational networks
Robert E. Marks
Allen Wilhite and Eric A. Fong Agent-based computational economics: a short introduction
Individual evolutionary learning with many agents
Matteo G. Richiardi
Jasmina Arifovic and John Ledyard
Aggregation in agent-based models of economies
Evolution of market heuristics
Scott E. Page
Mikhail Anufriev and Cars Hommes
On the scientific status of economic policy: a tale of alternative paradigms
Zero intelligence in economics and finance Dan Ladley
WEB RESOURCES
Agent-Based Computational Economics News Notes: April 2012
Agent-based computational economics (ACE) is the computational study of dynamic economic systems modeled as virtual worlds of interacting agents. http://www2.econ.iastate.edu/tesfatsi/ace0412.htm
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