This paper reviews the Zero Intelligence (ZI) methodology for investigating markets. This approach models individual traders, operating within a market mechanism, who behave without strategy, in order to determine the impact of the market mechanism and consequently the effect of trader behaviour. The paper considers the major contributions and models within this area from both the economics and finance communities before examining the strengths and weaknesses of this methodology.

In previous models of the building behaviour of termites, physical and logistic constraints that limit the movement of termites and pheromones have been neglected. Here, we present an individual-based model of termite construction that includes idealized constraints on the diffusion of pheromones, the movement of termites, and the integrity of the architecture that they construct. The model allows us to explore the extent to which the results of previous idealized models (typically realised in one or two dimensions via a set of coupled partial differential equations) generalize to a physical, 3-D environment. Moreover we are able to investigate new processes and architectures that rely upon these features. We explore the role of stigmergic recruitment in pillar formation, wall building, and the construction of royal chambers, tunnels and intersections. In addition, for the first time, we demonstrate the way in which the physicality of partially built structures can help termites to achieve efficient tunnel structures and to establish and maintain entrances in royal chambers. As such we show that, in at least some cases, logistic constraints can be important or even necessary in order for termites to achieve efficient, effective constructions. r

Abstract. The building behaviour of termites has previously been modelled mathematically in two dimensions. However, physical and logistic constraints were not taken into account in these models. Here, we develop and test a three-dimensional agent-based model of this process that places realistic constraints on the diffusion of pheromones, the movement of termites, and the integrity of the architecture that they construct. The following scenarios are modelled: the use of a pheromone template in the construction of a simple royal chamber, the effect of wind on this process, and the construction of covered pathways. We consider the role of the third dimension and the effect of logistic constraints on termite behaviour and, reciprocally, the structures that they create. For instance, when agents find it difficult to reach some elevated or exterior areas of the growing structure, building proceeds at a reduced rate in these areas, ultimately influencing the range of termite-buildable architectures.

We quantify the effects of financial regulation in an equilibrium model with delegated portfolio management. Fund managers trade stocks and bonds in an orderdriven market, subject to transaction taxes and constraints on short-selling and leverage. Results are obtained on the equilibrium properties of portfolio choice, trading activity, market quality and price dynamics under the different regulations. We find that these measures are neither as beneficial as some politicians believe nor as damaging as many practitioners fear. AbstractWe quantify the effects of financial regulation in an equilibrium model with delegated portfolio management. Fund managers trade stocks and bonds in an orderdriven market, subject to transaction taxes and constraints on short-selling and leverage. Results are obtained on the equilibrium properties of portfolio choice, trading activity, market quality and price dynamics under the different regulations. We find that these measures are neither as beneficial as some politicians believe nor as damaging as many practitioners fear.

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