NESS Newsletter number 4 - May 2012

NON-EQUILIBRIUM SOCIAL SCIENCE NUMBER 4 MAY 2012

WWW.NESSNET.EU PAGE 1

Coping with the global-scale challenges of financial instability, food security, climate change, sustainability, ...

(read more inside)

Social sciences are moving in a direction in which their various constituent parts are sharing a common set of foundations, languages and platforms, ...

(read more inside)

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.

Our newsletter is completed with a long list of announcements, including conferences, summer schools, journals and web resources.

Welcome and have a nice reading !

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 Université

Paul Cezanne in Aix-en Provence, Director of Studies at the Ecole des Hautes Etudes en Sciences Sociales (EHESS) and ...

(read more inside)

Interview with Alan Kirman

NESS Newsletter

4TH WORLD CONGRESS ON SO-CIAL SIMULATION

COMPLEXITY SCIENCE AND SOCIAL SCIENCE AT THE INTERFACE TO THE REAL WORLD CONFERENCE

http://www.nessnet.eu




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.

NESS - You’ve done very distinguished work in Economics, and a lot of it is highly technical and highly mathematical, so you have a

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 Sonnenschein-Mantel-Debreu produced their famous results, which show you essentially that if we approach Economics in

the

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.

Paul Ormerod and Alan Kirman at the NESS Grand Cha"enges workshop, March 2012





When they show that the only thing we can prove is that equilibrium exists and not that it was stable, not that it was unique under the usual assumptions, then you set yourself up, unless I’m going to believe that the system is all the time in equilibrium, somehow got there and will never move from there, then this is not a satisfactory explanation about what is going on in the world and so I became disillusioned at that point. But I have to admit that beforehand, I kept having this sort of feeling that these things we were doing were too abstract, too unreal, that all our assumptions ever came from introspection, not from careful observation of what people are doing.In other fields, you observe the facts, you observe what’s happening and you

try to say what is it that you’re seeing there that will need me to build a theory which will explain what’s happening. Here we seem to have gotten into an almost autistic situation, where we just build on the basis of our introspection and what we needed for the Mathematics, so we got better and better getting more and more general mathematical models, that told us less and less about the economic phenomena and in the end that’s all we are interested.

NESS - So the Sonnenschein-Mantel-

Debreu theorems were your sort of “road to Damascus”.

Alan Kirman - That’s right.

NESS - Although these may be very obscure, I mean, you’re correct that this represents an absolutely fundamental challenge to mainstream academics, but these results have been known since 30 years ago.

Alan Kirman - 1974. Or 1972-74.

NESS - So, forty years ago. Perhaps you might speculate as to why, because most economists now were simply not taught these results and so they disappeared, even though

they were produced by

highly mathematical economists themselves, published in the very top

Alan Kirman at the NESS Grand Cha"enges workshop, March 2012





mainstream journals. Why do you think these have disappeared from the teaching of Economics?

Alan Kirman - Well, it’s an interesting question because if you look at the people concerned, Rolf Mantel who unfortunately died, but Gerhard Debreu, Nobel prize for his work on general equilibrium, Hugo Sonnenschein, a leading mathematical economist who became the editor of Econometrica, how come that these people, having seen this, that the weight of their reputation didn’t somehow manage to persuade people that we

should really think, rethink all of this. I think what’s happened is 2

things: one is that general equilibrium as such, as it was then, is simply not taught anymore really, I mean you do find courses in Mathematic Economics where it’s part of it, but it’s basically not taught anymore. The other thing is that people, having seen the dangers of this, just simply tried to get rid of them. Macroeconomists call their models general equilibrium models but they’re not general equilibrium models because they don’t have many agents and so forth and how do you get out of

it? Well you assume that the Economy as a whole acts 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

macroeconomics took up the label of general equilibrium, but it’s not general equilibrium in the sense of what it used to be, and that tradition, as a result of Sonnenschein-Mantel-Debreu, faded away, but it’s not that we actually went up to a set of people saying “we have to rethink this, because of this”, or just said “oh, better not teach them that anymore because we see that this doesn’t lead anywhere”. But it only didn’t lead anywhere for those people who really understood what was going on. The rest just took the ball and ran with it in a






different direction.

NESS - So, your thinking now is that things like time and process and describing through looking at the facts, as well as interfacing with theory, what takes place in equilibrium, would you see that as an important basis for getting more understanding of the Economy?

Alan Kirman - Yes, I think 2 things. I would say that time, evolution and the changes in Economy, changes in people’s behavior, the fact that nothing is really fixed, and the whole system is 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 that macro behaves like the micro, but in fact, all of the

action is in between. That’s what we should be looking in the system and how it operates. And in so many systems, Biology, in physical systems, what you see is that a system of interacting particles is not going to behave like the average particle, it has different behavior, and that’s what we need to explain, how does the system coordinate itself. I think we’ve put so much emphasis on the efficiency and the optimization and that’s not how most people are really behaving. Behavioral Economics, on one side, says to us the assumptions you make about individuals don’t correspond to the way they

are behaving. And on the other side I think that the Sonnenschein-Mantel-Debreu results show us that the aggregate does not behave like an individual. So, somehow this structure is being tacked from both sides, both from the axioms of rationality and from macro-micro. People are still working on networks and so forth but it’s considered to be not an integral part of the central core of Economics. Now very good people like Matt Jackson and Sanjeev Goyal, they work on networks, but this is not somehow integrated in the main structure and it should be, it’s essential.






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?

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

believing in sunspots and not believing in the fundamentals. He also worked on self-organizing 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.






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

there’s also implicitly not only a philosophy but an ideology. So, if you start to say things like that, then you can’t lay down a set of rules and say “If only we write down the good set of rules, and the markets obey them, then everything will work ok”. Because the problem is, with these sort of systems, the rules have to be changing all the time, to

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

rules. But that’s what markets want. They say “Write down the charters, we want to obey”, but then of course they just got to find some way of taking a bank, then create an organism that’s not actually technically a bank, and then put assets into it. And you say, “Well, we’re going to rule that out”, but you have to constantly be reflexive,

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.

NESS - So finally, an impossible question really, because obviously we should be drawing inspiration from a whole range of sciences and disciplines, but if you had to advise a young economist which other discipline to look at to draw inspiration, and I think you can include Economic History in this question, because it has become divided, would you advise, I






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?Alan Kirman - That’s a tricky question.

NESS - Well, I wanted to catch you out at the end, you see…

Alan Kirman - I wanted to say, you should surely look at the history of Economics, so you should surely look at Economic History, you should surely look at Physics, because that’s where a lot of the tools are but, in a sentence, I think I

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 have all these feedbacks and so forth, and I think that one of the most important lessons that I have learned, much too late, I have always been interested in insects, you know, from entomology we’re always being told that these organisms have optimally adapted and so forth and that they are well organized and they have reached an optimum state and what you observe is that they’re not, they’re a mess. These systems collectively get a job done,

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.

NESS - Thank you very much.

Interview: Paul OrmerodEdition: Jorge Louçã, Françoise

Bourchenin and Bruno Gaminha





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 socio-technological 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

CONFERENCES







AMPLE'12 is the second AMPLE-workshop, building on the first edition held co-located with AAMAS'11 (Taipei, Taiwan), and joining forces with the congenial ABSSS-workshop (Agent Based

Simulations for a Sustainable Society), which held its first edition in November 2011, as part of the PRIMA conference (Wollongong, Australia).

This year the workshop will be held at the European Conference on Artificial Intelligence (ECAI) which will take place in Montpellier, France, August 27-31.

Socio-technical systems are complex adaptive entities in which social systems and technologies co-evolve. To attain policy goals in such an environment, social and technical elements require to be put to use in a combined way. In order to understand, analyze and design such complex systems, advanced tools are required. One of the major tools for understanding socio-technical systems is agent-based modeling. In recent years, social scientists from all domains, including

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

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 engineering. Policies for sustainable development require complex decisions about resource management, balance of economic, environmental and societal needs and involve many countries, interest groups and individuals. Especially for sustainable societies we are interested in simulations that can capture the behavioral patterns, changes and interactions in a society. This requires large scale simulations with relatively rich cognitive agents.

Paper Submission: 28 May 2012Web: http://ample2012.tudelft.nl/

AMPLE'12 - 2nd International Workshop on Agent-based Modeling for Policy Engineering

co-located with ECAI 2012 (Montpellier, August 27-31, 2012)

CONFERENCES



http://www2.lirmm.fr/ecai2012/index.php?option=com_content&view=article&id=47&Itemid=69




http://ample2012.tudelft.nl

http://ample2012.tudelft.nl



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

CONFERENCES



http://www.aiecon.org/conference/wcss2012

http://www.aiecon.org/conference/wcss2012



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 offer 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.

The Computational Social Science Society of the Americas

CONFERENCES

18-21 September 2012, Santa Fe

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 different 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 [email protected]



http://computationalsocialscience.org/

http://computationalsocialscience.org/

mailto:[email protected]

mailto:[email protected]



SUMMER SCHOOLS

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 offer two intensive week-long courses. The courses consist of lecture and supervised group projects. http://necsi.edu/education/school.html

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/

Lipari School on Computational Complex SystemsJuly 14 - July 21, 2012, Lipari Island



http://necsi.edu/education/school.html


http://necsi.edu/education/school.html?action=wk1




http://necsi.edu/education/school.html?action=lab


















TABLE OF CONTENTS

The special issue: agent-based computational economics—overviewRobert E. Marks and Nicolaas J. Vriend

Analysis and synthesis: multi-agent systems in the social sciencesRobert E. Marks

Agent-based computational economics: a short introductionMatteo G. Richiardi

Aggregation in agent-based models of economiesScott E. Page

On the scientific status of economic policy: a tale of alternative paradigms

Giorgio Fagiolo and Andrea Roventini

Agent-based economic models and econometricsShu-Heng Chen and Chia-Ling Chang and Ye-Rong Du

Agent-based models and hypothesis testing: an example of innovation and organizational networksAllen Wilhite and Eric A. Fong

Individual evolutionary learning with many agentsJasmina Arifovic and John Ledyard

Evolution of market heuristicsMikhail Anufriev and Cars Hommes

Zero intelligence in economics and financeDan Ladley

JOURNALS

Agent-Based Computational EconomicsNews 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

The Knowledge Engineering ReviewVolume 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

WEB RESOURCES







NESS Newsletter number 4 - May 2012

Documents

Transcript of NESS Newsletter number 4 - May 2012