Talk:Agent (economics)

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Response to query[edit]

Rinconsoleao,

If I'm reading the revision history correctly (it's my first time diving in there) you are the originator of the present definition in the first section of Agent (economics). It's a great definition, one many of us use on a daily basis, but I now must find a "scholarly" reference for the definition. Yikes. Any suggestions? Thanks.

DaveDixon (talk) 20:07, 17 April 2011 (UTC)

It's a word we used constantly when I was a graduate student in economics-- we all understood it meant "decision-maker", but I don't recall when I heard it defined. Here is my understanding of the origin of the word (but this is just a guess). Early microeconomic texts and models referred to a 'typical' firm as a 'representative firm', or a typical household as a 'representative household' (those terms go as far back as Jevons, I believe). At some point, when referring to these models in general, economists needed a word to refer to any decision-maker (instead of saying something clumsy like 'the representative firm or household or other type of decision-maker'); the term that became common was 'representative agent'. Thus agent (meaning 'one who undertakes an action', which has been used for centuries in law and business to mean someone delegated to act on behalf of someone else) came to be a generic term for a decision-maker. Today, modern macroeconomic models, especially DSGE and ACE models, analyze how many different types of decision-makers interact. Likewise, computer scientists analyze Multi-agent systems, meaning systems in which many decision-making programs interact. So again, a term for referring generically to any type of decision-maker is needed. Thus many papers on DSGE models begin with a phrase like 'the agents in this economy include households, firms, and a central bank...'.
Meanwhile, in game theory, decision makers are called players. So economists could alternatively use 'player' instead of 'agent'. But that term is usually reserved to models that are precisely defined as games; most economic models are defined somewhat more informally than game theory requires.
I will look for a formal definition. Possible sources include the New Palgrave, or advanced macroeconomic textbooks that talk about DSGE or ACE models. Remarkably, Shoham and Leyton-Brown's textbook Multiagent Systems doesn't formally define the term-- it just uses it from the beginning to refer to decision-makers. Alternatively, if we can't find a text that formally defines 'agent', I know we can find many, many macroeconomics papers that use the term in the way I've described, so we can quote papers to illustrate its accepted usage. Rinconsoleao (talk) 08:34, 18 April 2011 (UTC)
From Scott Page, "Agent based models" in the New Palgrave--
'An economy consists of agents who interact in space and time and who act purposefully choosing their actions, their strategies, and their locations with some objective in mind.'
From Mas-Colell, Whinston, Green, Microeconomic theory, page 3--
'A distinctive feature of microeconomic theory is that it aims to model economic activity as an interaction of individual economic agents pursuing their private interests.'
Later on the same page--
'It is common in microeconomics texts... to distinguish between two sets of agents in the economy: individual consumers and firms.