Leigh Tesfatsion: Agent-based Modeling Tools for Electric Power Market Design¶
Leigh Tesfatsion, Modeling Economic Systems as Locally-Constructive Sequential Games, Journal of Economic Methodology, vol 24, issue 4, 2017: 384-409.
- Working paper:
- Abstract: Real-world economies are open-ended dynamic systems consisting of heterogeneous interacting participants. Human participants are decision-makers who strategically take into account the past actions and potential future actions of other participants. All participants are forced to be locally constructive, meaning their actions at any given time must be based on their local states; and participant actions at any given time affect future local states. Taken together, these essential properties imply real-world economies are locally-constructive sequential games. This paper discusses a modeling approach, Agent-based Computational Economics (ACE), that permits researchers to study economic systems from this point of view. ACE modeling principles and objectives are first concisely presented and explained. The remainder of the paper then highlights challenging issues and edgier explorations that ACE researchers are currently pursuing.
Ekaterina Sinitskaya and Leigh Tesfatsion, Macroeconomies as Constructively Rational Games, Journal of Economic Dynamics and Control, vol 61, 2015: 152-182.
- Working paper:
- Abstract: This study transforms an otherwise standard dynamic macroeconomic model into an open-ended dynamic game by requiring consumers and firms with intertemporal utility and profit objectives to be locally constructive. Tested locally-constructive decision processes for the consumers and firms range from simple reactive reinforcement learning to adaptive dynamic programming (ADP). Computational experiments are used to explore macroeconomic performance under alternative decision-process combinations relative to a social planner benchmark solution. A key finding is that simpler decision processes can outperform more sophisticated decision processes such as ADP. However, memory length permitting some degree of adaptive foresight is critical for good performance.
Leigh Tesfatsion, Electric Power Markets in Transition: Agent-Based Modeling Tools for Transactive Energy Support, In Cars Hommes and Blake LeBaron (Eds.), Handbook of Computational Economics 4: Heterogeneous Agent Models, Handbooks in Economics Series, North Holland (Elsevier), Amsterdam, the Netherlands, forthcoming 2018.
- Abstract: Electric power systems consist of large numbers of heterogeneous participants interacting within an intricate layered network of economic and operational relationships. Decision-making in these systems has been extensively decentralized in many industrialized countries over the past twenty years in an attempt to increase their reliability and efficiency. Given the high negative impact of power disruptions, these decentralization efforts have typically been preceded by extensive sensitivity studies with empirically-based computational models. This chapter discusses the current and potential use of agent-based computational modeling to develop novel transactive energy system (TES) designs for electric power systems. TES designs are decentralized market-based designs that permit electric power systems to operate more fully in accordance with basic economic principles while maintaining overall system reliability and efficiency.