IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v232y2025ics0167268125000484.html
   My bibliography  Save this article

The optimal choice of scaling in economic agent-based models

Author

Listed:
  • Hosszú, Zsuzsanna
  • Borsos, András
  • Mérő, Bence
  • Vágó, Nikolett

Abstract

In economics, two strategies are typically employed to reduce the size and complexity of models: (i) using representative agents by aggregating the actual entities, (ii) and downscaling, i.e. using only a sample of agents. While the first strategy has been studied in detail in mainstream economics, the implications of the second option – which is mainly used in complexity economics – are underresearched. This paper contributes to filling this gap by proposing a protocol for sensitivity analysis with respect to the scaling choice in these models. We introduce this protocol in a dual manner. First, we identify three main theoretical channels via which scaling can influence complex economic ABMs: (i) idiosyncratic shocks, (ii) information loss due to insufficient interactions, and (iii) the distribution of the characteristics of agents. Second, we analyse the implications of these mechanisms by assessing the trade-offs between three fundamental measures of model performance: precision, accuracy and running time, with different downscaling levels ranging between 0.25%–100% of the full population. We illustrate our approach using the model of Mérő et al. (2023), which is suitable for representing the housing market of Hungary at any scale in this interval (from 10,000 to 4 million agents). We show that in this model there is a non-trivial relationship between the scaling factor and the model performance. Not only does the model’s accuracy and precision depend on the model size in a non-linear manner, we also found that the evaluation of a scenario at a given level of precision takes only three to four times longer with 100 times more agents.

Suggested Citation

  • Hosszú, Zsuzsanna & Borsos, András & Mérő, Bence & Vágó, Nikolett, 2025. "The optimal choice of scaling in economic agent-based models," Journal of Economic Behavior & Organization, Elsevier, vol. 232(C).
  • Handle: RePEc:eee:jeborg:v:232:y:2025:i:c:s0167268125000484
    DOI: 10.1016/j.jebo.2025.106928
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268125000484
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jebo.2025.106928?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Agent-based modelling; Housing market; Sensitivity analysis; Model size; Computational capacity;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D1 - Microeconomics - - Household Behavior
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:232:y:2025:i:c:s0167268125000484. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.