Summary
In economics, an agent is an actor (more specifically, a decision maker) in a model of some aspect of the economy. Typically, every agent makes decisions by solving a well- or ill-defined optimization or choice problem. For example, buyers (consumers) and sellers (producers) are two common types of agents in partial equilibrium models of a single market. Macroeconomic models, especially dynamic stochastic general equilibrium models that are explicitly based on microfoundations, often distinguish households, firms, and governments or central banks as the main types of agents in the economy. Each of these agents may play multiple roles in the economy; households, for example, might act as consumers, as workers, and as voters in the model. Some macroeconomic models distinguish even more types of agents, such as workers and shoppers or commercial banks. The term agent is also used in relation to principal–agent models; in this case, it refers specifically to someone delegated to act on behalf of a principal. In agent-based computational economics, corresponding agents are "computational objects modeled as interacting according to rules" over space and time, not real people. The rules are formulated to model behavior and social interactions based on stipulated incentives and information. The concept of an agent may be broadly interpreted to be any persistent individual, social, biological, or physical entity interacting with other such entities in the context of a dynamic multi-agent economic system. An economic model in which all agents of a given type (such as all consumers, or all firms) are assumed to be exactly identical is called a representative agent model. A model which recognizes differences among agents is called a heterogeneous agent model. Economists often use representative agent models when they want to describe the economy in the simplest terms possible. In contrast, they may be obliged to use heterogeneous agent models when differences among agents are directly relevant for the question at hand.
About this result
This page is automatically generated and may contain information that is not correct, complete, up-to-date, or relevant to your search query. The same applies to every other page on this website. Please make sure to verify the information with EPFL's official sources.
Related publications

No results

Related people

No results

Related units

No results

Related concepts (25)
Agent-based computational economics
Agent-based computational economics (ACE) is the area of computational economics that studies economic processes, including whole economies, as dynamic systems of interacting agents. As such, it falls in the paradigm of complex adaptive systems. In corresponding agent-based models, the "agents" are "computational objects modeled as interacting according to rules" over space and time, not real people. The rules are formulated to model behavior and social interactions based on incentives and information.
Dynamic stochastic general equilibrium
Dynamic stochastic general equilibrium modeling (abbreviated as DSGE, or DGE, or sometimes SDGE) is a macroeconomic method which is often employed by monetary and fiscal authorities for policy analysis, explaining historical time-series data, as well as future forecasting purposes. DSGE econometric modelling applies general equilibrium theory and microeconomic principles in a tractable manner to postulate economic phenomena, such as economic growth and business cycles, as well as policy effects and market shocks.
Microfoundations
Microfoundations are an effort to understand macroeconomic phenomena in terms of economic agents' behaviors and their interactions. Research in microfoundations explores the link between macroeconomic and microeconomic principles in order to explore the aggregate relationships in macroeconomic models. During recent decades, macroeconomists have attempted to combine microeconomic models of individual behaviour to derive the relationships between macroeconomic variables.
Show more
Related courses (7)
FIN-608: Information and Asset Pricing
We study the role of information in equilibrium asset pricing models. We cover simple one-period models of incomplete and asymmetric information using competitive rational expectation equilibria and B
CS-430: Intelligent agents
Software agents are widely used to control physical, economic and financial processes. The course presents practical methods for implementing software agents and multi-agent systems, supported by prog
ENV-723: Models for applied environmental economics
Mainly based on the discussion of peer reviewed academic papers, the course introduces non economists to the main types of applied models used in environmental economic analysis: linear programming, p
Show more
Related lectures (18)
Decentralized Economy: Consumers and Firms
Explores the transition to a decentralized economy with individual consumer and firm decisions.
Macroeconomic Model Analysis
Explores the impact of productivity shocks and government policies on key economic variables.
Monetary Policy and Public Debt Analysis
Analyzes monetary and fiscal policy responses to public debt accumulation and the impact of Covid-19 on global economies.
Show more
Related MOOCs

No results