agents


Written By: Ehsan Jahandarpour

In economics, an agent is an actor and decision maker in a model. Typically, every agent makes decisions by solving a well or ill-defined optimization/choice problem. For example, buyers and sellers are two common types of agents in partial equilibrium models of a single market. Macroeconomic models, especially dynamic stochastic general equilibrium models that are explicitly based on microfoundations, often distinguish households, firms, and governments or central banks as the main types of agents in the economy. Each of these agents may play multiple roles in the economy; households, for example, might act as consumers, as workers, and as voters in the model. Some macroeconomic models distinguish even more types of agents, such as workers and shoppers or commercial banks. The term agent is also used in relation to principal–agent models; in this case it refers specifically to someone delegated to act on behalf of a principal. In agent-based computational economics, corresponding agents are “computational objects modeled as interacting according to rules” over space and time, not real people. The rules are formulated to model behavior and social interactions based on stipulated incentives and information. The concept of an agent may be broadly interpreted to be any persistent individual, social, biological, or physical entity interacting with other such entities in the context of a dynamic multi-agent economic system.