Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Simulated Economy Tutorial

jasonfantl.com

Post reply on HN
Print view View original

31–40 of 69 posts

Re: Simulated Economy Tutorial

#31

Post by noosphr »

wordpad wrote: post #28
noosphr wrote: post #27

Earlier quoted context omitted.

That's only for two way relationships, you need N way relationships, which is N^N.

Wouldn't you be able to quickly prune away invalid/unlikely interactions? Maybe, have some cutoff based on proximity of members or something?

Yes, the resulting tensor is incredibly sparse, but still too large to ever be practical for use as anything but the theoretical upper limit on the complexity of a model.

The issue is that while you can remove pretty much all possible interactions for a specific case you have no idea where an interaction could pop up unexpectedly with a huge impact ahead of time.

For the medieval theme the leader of the village may be a cousin of the king which is a very distant but very strong interaction.

Re: Simulated Economy Tutorial

#33

Post by exe34 »

noosphr wrote: post #31
wordpad wrote: post #28

Earlier quoted context omitted.

Wouldn't you be able to quickly prune away invalid/unlikely interactions? Maybe, have some cutoff based on proximity of members or something?

Yes, the resulting tensor is incredibly sparse, but still too large to ever be practical for use as anything but the theoretical upper limit on the complexity of a model. The issue is that while you can remove pretty much all possible interactions for a specific case you have no idea where an interaction could pop up unexpectedly with a huge impact ahead of time. For the medieval theme the leader of the village may b…

how many people do you talk to in a day?

Re: Simulated Economy Tutorial

#34

Post by DeathArrow »

Just as in the real world we don't spend most time fighting between each other or some monsters, it would be nice to have a MMO that focuses mostly on economic activities. By that I mean producing goods services and trading.

Re: Simulated Economy Tutorial

#35

Post by exe34 »

Predicting the weather helps save money for rich people. Predicting the economy might not be as profitable for them if everybody uses it. Booms and busts are a feature, not a bug.

Re: Simulated Economy Tutorial

#36

Post by littlestymaar »

onlyrealcuzzo wrote: post #8
jgord wrote: post #4

Just as we have weather forecasting, climate models .. we do need and should have good fine-grain computational models of complex systems such as the cell .. and the global economy. We should be able to have whole economy simulations give reasonable predictions in response to natural events and lever-pulling such as : - higher progressive tax rates - central bank interest rate moves - local tariffs and sanctions - sh…

We already have tons of those models. None of them are perfect. And they never will be. Could the be better? Yes. The problem is, you won't really know they're better until post-ex. And even then, you'll never be sure how much better. They're always bound to fail catastrophically at some point. Etc.

In fairness we don't really have such models, at least not anymore.

We used to, that's what “macro” economics was about. The models where crude but they did the job for a while, we used them for more than 30 years between the 40s and the late 70s, with great success (no economic crisis for the longest time since the industrial revolution).

But they conflicted with the idea that economist made of their job, as these models didn't include any if the classical economics credo that economists had been worshipping for almost two centuries (markets, competition, scarcity, supply and demand, etc.). So people started building “micro-founded” macro models, that tried to reconcile the empirical models that worked with the ideological principles of classical economics. But you can't have good models if you design them to match an ideological paradigm.

And then as you said, it failed catastrophically: the oil shock came, and suddenly the forecasts of the models became useless for a while. At that very moment, everyone who opposed to using models to justify state intervention where thrilled, and the era of short-terms economic engineering based on models was dead.

Re: Simulated Economy Tutorial

#37

Post by dmbche »

jgord wrote: post #4

Just as we have weather forecasting, climate models .. we do need and should have good fine-grain computational models of complex systems such as the cell .. and the global economy. We should be able to have whole economy simulations give reasonable predictions in response to natural events and lever-pulling such as : - higher progressive tax rates - central bank interest rate moves - local tariffs and sanctions - sh…

You've stumbled upon Chaos Theory (https://en.m.wikipedia.org/wiki/Chaos_theory), which aims to study chaotic systems (charactesised by very high relation to initial variables - see weather prediction, double pendulum, etc).

Some problems are too sensible to initial variables and solutions are not prescriptive like regular physics - meaning that variability at the 20th decimal in your initial variables will induce massive output differences. Lorentz discovery of this is interesting as he was working on weather modelling, it's a clear example of the issues with chaotic systems. He was running simulations of weather systems with multiple fixed initial variables (temperature, wind speed, etc) and seeing how the system progressed over a few hours. He realised that after a typo on a very far away decimal on a single parameter, the system was modelling the complete opposite of what we had seen in the previous test (think it was forecasting a typhoon when it used to say sunny day), even while using values that would be "equal" with relation to the precision of the measuring equipement. And that's nothing to talk about getting clean, precise enough data for such models, which is practically impossible (see the observer effect, between other causes). Garbage in, garbage out.

All this to say that problems in this sphere are characterized by quickly becoming untractable and impossible to model precisely how they evolve over time.

I can recommend James Gleick's Chaos: Making a new science for a overview for the layperson.

Re: Simulated Economy Tutorial

#38

Post by littlestymaar »

huitzitziltzin wrote: post #16
jgord wrote: post #4

Just as we have weather forecasting, climate models .. we do need and should have good fine-grain computational models of complex systems such as the cell .. and the global economy. We should be able to have whole economy simulations give reasonable predictions in response to natural events and lever-pulling such as : - higher progressive tax rates - central bank interest rate moves - local tariffs and sanctions - sh…

There’s a whole discipline which does nearly that, though they do not use this style of agent based model. Generally agent based models have numerous parameters which can take many values (endowments, preferences) and the models don’t themselves give any guidance about how to set the parameters. Theory can give limited guidance (eg., that function is concave, this parameter is negative). Sometimes we have experimenta…

> and an equilibrium assumption to recover the parameters

That parts makes no sense though, there isn't an equilibrium and can never be, economies are a chaotic system. One of the key problems of economic modeling is that they used mathematical tool that aren't suited for that.

You can't consider an economy as a steam engine. Walras was a trained engineer in the 19th century so I can excuse him for making this approximation, but I can't excuse anyone still following his course more than a century later.

Re: Simulated Economy Tutorial

#39

Post by cookiemonsieur »

can the economy even be predicted ? Was it ever done to any successful degree in the past ? And if so, to what end ?

I like the idea conceptually, but it doesn't seem to be good enough to halt economic disasters (or correction as we like to call them nowadays).

Re: Simulated Economy Tutorial

#40

Post by imtringued »

huitzitziltzin wrote: post #12
dlojudice wrote: post #2

Agent-based modeling offers a more realistic approach to economic systems than traditional equilibrium models. New approachs including generative agents (ABM+LLMs) are promising. J. Doyne Farmer's recent book "Making Sense of Chaos: A Better Economics for a Better World" is a great reading for those interested in this field. https://www.amazon.com/Making-Sense-Chaos-author/dp/02412019...

No. There is no macroeconomist who wouldn’t adopt these approaches if they were “better”. Agent based models have been around since the 1980’s at least. No one uses them in central banks, no one uses them in industry, and you can be very confident that they’ve tried.

You're taking this from the perspective of people who are stuck in a specific mental framework who want to prove that their mental framework is the right one, no matter how impossible it is in practice.

What if you don't care about tuning against a real macro-economy? What if the economy being fictional was the entire point?

Let's suppose you wanted to make a game that simulates a realistic economy as a gameplay element no different from say a physics engine. Why wouldn't you do it using agent based modeling? What you're saying sounds purely dogmatic now. It's more about thought termination than actually accomplishing something. After all, central banks and businesses don't give a damn that agent X did action Y at time Z for all agents, actions and times. Meanwhile in a game? It's actually essential, because the model is the reality inside that fictional world. The model is "perfect".

Post reply on HN