Contradiction to mechanism design in economics

Mechanism design is one facet of game theory which creeps up in multi-agent systems literature when complex decisions have to be taken. The 2007 Economics Nobel prize was awarded on the same theory being proposed to introduce efficent market algortihms.
In theory, mechanism design relates to the making of decision by every agent keeping in consideration what the other agents might decide, not only to maximise its own utility factor but also the system's overall performance. And this is why most MD literature refers to auction based mechanisms where every agent submits their bids, and a central agent decides who gets to perform the task. There is much research progressing towards how this could be applied on a decentralised manner to acheive the same goals.
However, in reality if we were to apply this principle to for say, malls competing for the same pool of customers, every mall agent would be wanting to increase their own profits, possibly predicting the other mall's behaviour before making the decision, giving less consideration what would be better for the complete society. This is possible why the proverb, rich get richer and poor get poorer might be true. every agent behaves only on their preferences, not caring how the community gets affected. And this is why some businesses might be able to monopolise the business by various strategies taken at the right time while others only struggle to survive.

Deviation- back to FLAME methods

Due to Eurace visit, have to stop work on state generation and turn back to FLAME methods to code up the ipd game example. Probably later I can use this coded example and modify it to states in a month's time:).

The drive towards event-based agents

Flame allows the iterations to be represented by the shortest time scale a model could possess. This creates problems for issues where agents would be reactive and accordingly change their behvaiour during the course of the model. A way to inhabit this aspect is a turn towards state based modelling of agents. Every iteration would then be represented as the path from the start state of the agent to the end state of the agent in that one iteration. This would map behaviours of agents with deliberative and reactive natures corrently into the model and can also see a possible extension to the hierarchy of various models embedded into each other. Consequently, this raises the problem of parallelisation of agents. This leads me to question whether we need to have synchronisation points or if we were to remove them would deadlocks still arise? If so how would this be handled. Lack of correct use of formal definition of agents in Flame is causing discrepancies!

Agent Planning

In EURACE, for now, the agents are planning (considering one period in the future) their current activities. This is an individual planning, not a priori.

Stuff to do for May

• Have to work on a possibility for using neural network implementation in place of classifier systems in the bargaining model by Moulet et al.
• Code an example of agents playing Monopoly with rational and dumb agents.
• Read up on Reinforcement Learning and gaming.

Econophysics

Seems game theory is not very promising to be able to do strategic decisions. These startegies are not a big issue as is learning in agents. Econophysics on the other hand seems good.
Coming from physics, an old passion of mine, it focuses on heterogenous agents interacting in non equilibrium situations in economics. Examples include using mechanical equilibrium to explain general equilibrum theory, or using the Black-Scholes formula for pricing is similar to heat diffusion. Wikipedia although does say that the subject is not very favoured by economists.

Mathematical issues

Reading through von Neumann's book (page 47 onwards) games have taken a more mathematocal approach:
If game G has n players. Then for each player there will be a number of moves M1, M2,...,Mv .
For each move there would also exist alternates for moves a(1), a(2),...a(v).
These vary according to the moves or strategies being chosen.

Then comes a second scenario of a game of Poker P. The moves being played will differ is cheating is involved, one player known the moves or cards of the other players, OR if nobody is cheating.