AGENT BASED MODELLING & CIRCUITIST THEORY

This is a note to myself.

 

I have gone to great lengths to prove to myself and others that the ability to forecast the market is impossible, at least to any high degree of probability yet I spend inordinate amounts of time seeking a model that puts things nicely into place.

There is no doubt it is the need within me that is seeking an answer to something I know only too well is unknowable, so I decided to be a little indulgent, perhaps it will serve me better to understand the enemy camp a little better.

 

Today was a left brain focused day, where I spent most of it researching Agent Based Modelling & Circuitist Theory.

 

The concept of Agent Based Modelling is appealing to me for a number of reasons. In essence a couple of days ago whilst studying the subject I came across a simulator model that is able to simulate an artificial stock market. The appeal to me is that if one has a really good simulator then one can firstly test some of the models we have been working on, the second appeal is that perhaps then I can forecast the markets (hmmmn what is with me on this subject). To end this section off, I have sifted through heaps of programmes and come across one that I will spend some time working with, it has built in evolutionary and social dynamic models, such like modelling how birds flock, or how rumours are spread, and 100’s more. I guess in a nutshell alot of the behind the scenes thinking in these models is game theory or genetic algorithm based.

 

Circuitist Theory is based on a closed circuit monetary economic model. Such that you break down an economy into a skeleton of variables, and then observe the behaviour of the circuit based on the actions of the agents within the model. As we know the market is not made of supremely rational agents however they do equilibriate to a point. Steve Keen an Aussie Economic Professor is one of the leaders in this field and who writings led me down this path. I find this extremely interesting and I do believe quite logical. It by no means predicts the markets behaviour but can certainly provide a probable string of events based on certain conditions.