Pete Vincent wrote,
>Most importantly, the simulation will be of no value if it is
>algorithm-driven. To reflect the true picture, it must be an FSA
>(Finite State Automata) model. Algorithms may be deduced from its
>results, but not ordained in its construction. The simulation should
>model the actions of individual players, and be iterated over cohorts
>over time. A well constructed simulation should be able to model
>any form of economy one can imagine, and not be limited by the
>constrictive assumptions built into an algorithm-driven simulation.
This is so important. It can't be emphasized too strongly. I don't suppose
that everybody will understand what Pete is talking about right off the bat.
Everyone, please, print out the above paragraph and paste it over your
monitor screen. DO NOT REMOVE until you think you have an idea of what Pete
is talking about.
Conventional simulations unknowingly assume the greater part of the outcome
they are supposed to be simulating. The way that they do this is by
incorporating "simplifying" assumptions into their algorithms. Variables end
up no longer being variable. Dynamic interactions are dumbed down into
ratios. It's not unusual to find simple accounting errors (double-counting
is common) wired into the models at such a basic level that no one ever sees
them again.
Pete is right that a proper simulation is not a trivial project, but I think
there can be, and need to be, "simulation essays" that take a small corner
of the economic universe and show how FSA and algorithm-driven models
differ. One of the problems now is that "Model A" simulation has been around
long enough to etch its own distortions into the economic landscape. The
unintended consequences of a solution to one problem become a bigger problem
than the original problem.
Regards,
Tom Walker
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