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A Co-evolutionary Simulation

of Multi-Branch Enterprises

Edmund ChattoeCentre for Research on Simulation in the Social

Sciences (CRESS),Department of Sociology

University of SurreyGuildford GU2 5XH

E.Chattoe@surrey.ac.ukhttp://www.soc.surrey.ac.uk/staff/edmund_chattoe.html

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Simulation

• Social processes as computer programs.

• Heterogeneous agents: firms, branches and consumers.

• Parallel autonomous processes.• Linking macro/micro and

mental state/action.• Integration of theories.• Integration of data: qualitative

and quantitative.

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Evolutionary Approaches to Social Action

• Not genetic determinism!• Population Approach: Mental

models leading to actions with differential success.

• Distinction between agent and environment.

• Robust self-organisation with minimal rationality.

• Concrete models based on Evolutionary Algorithms.

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Motivation of the Model

• Suitable market for evolutionary modelling.

• Intuitive environment for fair comparison of learning methods.

• Difficult learning task.• “Independent” specification of

agents in simulation.• Possibilities for emergent data.• High level view of relation

between agents and environment.

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Three Relations Between Theorist, Manager and Environment

Environment

Manager Theorist

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High Level Description

• Spatially distributed consumers and branches.

• Consumers seek suitable meals.• Firms collect sales/practice data.• Learning changes practices.• Consumers, branches and firms

linked by common representation of practices:

0000010010110

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Consumers

• Fixed chance of hunger.• Two behaviour modes (random

search and loyalty) and memory of “best” branch.

• Tolerance based on Hamming Distance.

• Changing tolerance.• Fatigue.• Consumer types.• Dis-satisfaction.

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Firms and Branches

• Set of practices.• Running and capital costs.• Income from sales.• Profits as surplus over costs.• Learning algorithm and

decision process.

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Typical Output 1: Location Graph

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Typical Output 2: Favourite Branch Graph

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Typical Output 3: Sales Graph

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Typical Output 4: Profit Graph

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Typical Output 5: Dis-satisfaction Graph

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Consumer Conditions

• Random practice change on loss.• Fixed preference, no tolerance, 4

types.• Fixed preference, tolerance 1, 4

types.• Changing preference, no

tolerance, 4 types.• No tolerance, fatigue, 4 types.• Fixed preference, tolerance 1, no

types.

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Results: Consumer Conditions

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Learning Conditions

• No adaptation.• Random change on loss.• Independent hill-climbing.• Loss threshold leading to

imitation/Lamarckian differentiation.

• Many more possibilities ...

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Results: Learning Conditions

Run Total Sales Dis-satisfaction Total ProfitsReference 6,689 213,439 12,155Reference 8,977 114,434 27,004Condition 6 4,321 317,728 -8,084Condition 6 5,964 245,496 -9,104Condition 7 7,123 195,608 929Condition 7 7,712 165,594 22,641Condition 8 7,588 172,319 19,893Condition 8 9,886 75,566 45,211

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Discussion

• Profit insulates from selection.• Satisficing is environmentally

stable while optimising is not.• Need to identify market niches

based on consumer knowledge.• Hill-climbing has difficulties in

non-stationary environments.• Even naive evolution is

surprisingly effective.

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IMAGES Project

• Payments for ecological activities.• Agent based models of innovation

diffusion.• Information transfer through

social networks.• Interaction of social and economic

reasoning.• Integration of qualitative

interviews, farm surveys and secondary data.

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Modelling Budgetary Decision of Pensioners

• Developing simulation inductively from interviews.

• Integrating economic and sociological theories.

• Importance of:o Time planning.o Durable scheduling.o Joint activities.o Budgeting strategies: multiple accounts.

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Evolution of Pricing Strategies in Oligopoly

• Firms use Genetic Programs to set prices.

• Programs are modified by profit induced mutation/imitation.

• Random generation of strategies still allows stable markets and responsive behaviour.

• Stylised behaviours like price following and “cost plus” pricing are observed to evolve.

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Research Plans

o Simulations linking actual firm micro practices with market outcomes.

o Extension of time planning approach beyond consumption choice.

o Memetic models of information transmission for establishment of “culture”.

o Social dimensions of electronic commerce and crime.

o Agent based models of innovation diffusion: a case based approach.

o Charity shops as alternative spaces of consumption.