Tesfatsion, Leigh

Eastern Economic Journal Vol. 37 (2011): 13-19.

The recent economic crisis has led to calls for a comprehensive restructuring of energy, financial, health care, and educational systems. Critics worry the restructuring of these complex institutional arrangements could produce adverse unintended consequences. Given these concerns, pre-testing of proposed changes is eminently desirable but also exceedingly difficult. This essay focuses on the potential use of agent-based modeling for studying proposed changes in institutional arrangements in advance of actual implementation. Ongoing agent-based research on the restructuring of electric power markets is used for concrete illustration.

JEL Classification: C6, L1, Q4

Keywords: agent-based modeling, Institutional Design, electric power markets