Agent Strategies in Economy Market

Abstract

IThis chapter presents a method on modelling the economy market using agent-based representation and iterated prisoner’s dilemma (IPD). While IPD has been used widely in various economic problems, most of the studies were based on quantitative data which could be deductive and inappropriate. The main objective of this chapter is to present a unique agent based approach which places lower demand on data using IPD to model the complexity of the economy market. We create a simulated market environment with agents acting as firms to perform transactions among each other with chosen IPD strategy. From empirical results, we investigate strategic interactions among different firms. In the concluding remarks, we present our observations on the qualities of a winning strategy.