Many models of Nash Equilibrium are complex enough that it becomes difficult to ascertain if and under what conditions the economic players can find and maintain this equilibrium. Using an analytical overlapping- generations model of goods, labor, and banking markets and quasi-rational discrete choice decision making, we find through agent-based simulations that Nash Equilibrium in goods market prices is stable when firms are sufficiently sensitive to changes in profits. In addition to verifying the analytical Nash outcome, the simulations verify that their economic agents, decision rules, and other protocols correspond to and maintain consistency with the analytical theory and identify important bounds of the analytical model. Copyright Springer Science+Business Media, LLC 2007Quasi rationality, Discrete choice, Life-cycle hypothesis, Nash equilibrium, Overlapping generations, Agent-based simulation, C62, C63, D91,

We are extending the existing features of Aspen, a powerful economic modeling tool, and introducing new features to simulate the role of confidence in economic activity. The new model is built from a collection of autonomous agents that represent households, firms, and other relevant entities like financial exchanges and governmental authorities. We simultaneously model several interrelated markets, including those for labor, products, stocks, and bonds. We also model economic tradeoffs, such as decisions of households and firms regarding spending, savings, and investment. In this paper, we review some of the basic principles and model components and describe our approach and development strategy for emulating consumer, investor, and business confidence. The model of confidence is explored within the context of economic disruptions, such as those resulting from disasters or terrorist events.

This white paper represents a summary of work intended to lay the foundation for development of a climatologicaVagent model of climate-induced conflict. The paper combines several loosely-coupled efforts and is the final report for a four-month late-start Laboratory Directed Research and Development (LDRD) project funded by the Advanced Concepts Group (ACG). The project involved contributions by many participants having diverse areas of expertise, with the common goal of learning how to tie together the physical and human causes and consequences of climate change. We performed a review of relevant literature on conflict arising from environmental scarcity. Rather than simply reviewing the previous work, we actively collected data from the referenced sources, reproduced some of the work, and explored alternative models. We used the unfolding crisis in Darfur (western Sudan) as a case study of conflict related to or triggered by climate change, and as an exercise for developing a preliminary concept map. We also outlined a plan for implementing agents in a climate model and defined a logical progression toward the ultimate goal of running both types of models simultaneously in a two-way feedback mode, where the behavior of agents influences the climate and climate change affects the agents. Finally, we offer some "lessons learned" in attempting to keep a diverse and geographically dispersed group working together by using Web-based collaborative tools.

This paper builds upon previous work [Sprigg and Ehlen, 2004] by introducing a bond market into a model of production and employment. The previous paper described an economy in which households choose whether to enter the labor and product markets based on wages and prices. Firms experiment with prices and employment levels to maximize their profits. We developed agent-based simulations using Aspen, a powerful economic modeling tool developed at Sandia, to demonstrate that multiple-firm economies converge toward the competitive equilibria typified by lower prices and higher output and employment, but also suffer from market noise stemming from consumer churn.In this paper we introduce a bond market as a mechanism for household savings. We simulate an economy of continuous overlapping generations in which each household grows older in the course of the simulation and continually revises its target level of savings according to a life-cycle hypothesis. Households can seek employment, earn income, purchase goods, and contribute to savings until they reach the mandatory retirement age; upon retirement households must draw from savings in order to purchase goods. This paper demonstrates the simultaneous convergence of product, labor, and savings markets to their calculated equilibria, and simulates how a disruption to a productive sector will create cascading effects in all markets. Subsequent work will use similar models to simulate how disruptions, such as terrorist attacks, would interplay with consumer confidence to affect financial markets and the broader economy.4