John Holland, John Miller

Paper #: 91-05-025

Economic analysis has largely avoided questions about the way in which economic agents make choices when confronted by a perpetually novel and evolving world. As a result, there are outstanding questions of great interest to economics in areas ranging from technological innovation to strategic learning in games. This is so, despite the importance of the questions, because standard tools and formal models are ill-tuned for answering such questions. However, recent advances in computer-based modeling techniques, and in the subdiscipline of artificial intelligence called machine learning, offer new possibilities. Artificial adaptive agents (AAA) can be defined and can be tested in a wide variety of artificial worlds that evolve over extended periods of time. The resulting “complex adaptive systems” can be examined both computationally and analytically, offering new ways of experimenting with and theorizing about adaptive economic agents.