No. 403: Was Hayek an Ace?
Nicolaas J. Vriend ,
Queen Mary and Westfield College, University of London
May 1, 1999
In order to address the question whether Hayek might have been an Agent-based Computational Economist (ACE) avant-la-lettre, we consider an ACE model concerning the phenomenon of information contagion. Alongside increasing returns, network externalities, and information cascades, information contagion has been presented in the literature as an explanation for particular patterns of macrobehavior that may seem at odds with the underlying micromotives. But whereas these other explanations have been shown to have a proper microfoundation, information contagion has remained a phenomenon that seemed to occur only when certain ad hoc rules of thumb for individual behavior are assumed. We show how information-contagious behavior can emerge in a coevolutionary process of interacting adaptive agents, how this is related to various Hayekian themes, and how ACE research in general is an application of Hayek's methodological insights.
J.E.L classification codes: B21, B31, B41, D11, D83, O33
Keywords:Hayek, Agent-based Computational Economics, Decentralized interaction, Distributed knowledge, Reinforcement learning, Information aggregation, Self-organization, Spontaneous order, Methodology