Modelling Bounded Rationality using Evolutionary Techniques

Abstract

A technique for the credible modelling of economic agents with bounded rationality based on the evolutionary techniques is described. The genetic programming paradigm is most suited due to its meaningful and flexible genome. The fact we are aiming to model agents with real characteristics implies a different approach from those evolutionary algorithms designed to efficiently solve specific problems. Some of these are that we use very small populations, it is based on different operators and uses a breeding selection mechanism. It is precisely some of the "pathological" features of this algorithm that capture the target behaviour. Some possibilities for integration of deductive logic-based approaches and the GP paradigm are suggested. An example application of an agent seeking to maximise its utility by modelling its own utility function is briefly described.