Home  Journals  Economic Analysis: Theory and Practice  10(481) - 2018 October

Modeling the mechanisms of economic agent behavior

Vol. 17, Iss. 10, OCTOBER 2018

Article PDF Version

Received: 26 June 2018

Received in revised form: 30 July 2018

Accepted: 15 August 2018

Available online: 31 October 2018

Subject Heading: THEORY OF ECONOMIC ANALYSIS

JEL Classification: А22, I21, L50, O47

Pages: 1835–1848

https://doi.org/10.24891/ea.17.10.1835

Subject The article explores, systematizes, and integrates economic knowledge in relation to the analysis of economic agents' behavior. It also simulates economic behavior of economic agents, considering the logic of the fourth wave of modern science development (cognitive revolution in scientific knowledge).
Objectives The purpose of the study is to develop application-oriented tools to simulate the mechanisms of economic behavior of economic agents, taking into account the obtained results of the modern economic thought evolution. We assume that consumer behavior is irrational. It is not accidental, but of systematic character.
Methods The research rests on the cognitive potential of behavioral and institutional economics, results of the prospect theory, instruments of economic and mathematical simulation enabling to systematize the economic knowledge in the context of analysis of economic agents' behavior.
Results We revealed the continuum of the modern knowledge in the context of cognitive revolution. The paper adduces arguments that preferences of individuals are endogenous, and the factor really controlling their behavior (decision-making) is neither more nor less than human irrationality. At the same time, economic agents react to a greater extent to the context of situation and adapt to changes. They estimate changes in absolute, rather than in relative terms.
Conclusions The findings may create a basis for creating a scientific basis to choose economic agents and control their behavior.

Keywords: behavioral analysis, consumer choice, economic simulation, economic agent, economic behavior

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