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Emerging collective behavior and local properties of financial dynamics in a public investment game

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  • da Silva, Roberto
  • Bazzan, Ana L.C.
  • Baraviera, Alexandre T.
  • Dahmen, Sílvio R.

Abstract

In this paper we consider a simple model of a society of economic agents, namely a variation of the well known “public investment game”, where each agent can contribute with a discrete quantity, i.e., cooperate to increase the benefits of the group. Interactions take place among nearest neighbors and depend on the motivation level (insider information, economy prospects). The profit is used to update individual motivations. We first explore a deterministic scenario and the existence of fixed points and attractors. We also consider the presence of noise, where profits fluctuate stochastically. In this scenario we analyze the global persistence as a function of time—a measure of the probability that the amount of money of the entire group remains at least equal to its initial value. Our simulations show that this quantity has a power law behavior. We have also performed simulations with a population of heterogeneous agents, including deceivers and conservatives. We show that, although there is no regular pattern regarding the average wealth, robust power laws for persistence do exist and argue that this can be used to characterize the emerging collective behavior. The influence of the motivation updating and the presence of conservatives and deceivers on persistence is also studied. Simulations for the local persistence exploring two different versions of this concept: the probability of a particular agent not going bankrupt (i.e., remaining wealth ⩾0 up to time t) and the probability of a particular agent making more money than he initially had. Different power law behaviors are also observed in these situations.

Suggested Citation

  • da Silva, Roberto & Bazzan, Ana L.C. & Baraviera, Alexandre T. & Dahmen, Sílvio R., 2006. "Emerging collective behavior and local properties of financial dynamics in a public investment game," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 371(2), pages 610-626.
    • Handle: RePEc:eee:phsmap:v:371:y:2006:i:2:p:610-626
    DOI: 10.1016/j.physa.2006.03.051
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    References listed on IDEAS

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    1. da Silva, Roberto & Alves, Nelson, 2005. "Dynamic exponents of a probabilistic three-state cellular automaton," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 350(2), pages 263-276.
    2. Joshua M. Epstein & Robert L. Axtell, 1996. "Growing Artificial Societies: Social Science from the Bottom Up," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550253, April.
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    Cited by:

    1. da Silva, Roberto & Zembrzuski, Marcelo & Correa, Fabio C. & Lamb, Luis C., 2010. "Stock markets and criticality in the current economic crisis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(23), pages 5460-5467.
    2. Valverde, Pablo A. & da Silva, Roberto & Stock, Eduardo V., 2017. "Global oscillations in the Optional Public Goods Game under spatial diffusion," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 474(C), pages 61-69.
    3. da Cunha, C.R. & da Silva, R., 2020. "Relevant stylized facts about bitcoin: Fluctuations, first return probability, and natural phenomena," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 550(C).
    4. C. R. da Cunha & R. da Silva, 2019. "Relevant Stylized Facts About Bitcoin: Fluctuations, First Return Probability, and Natural Phenomena," Papers 1905.03211, arXiv.org.
    5. Liu, Yi-Fang & Zhang, Wei & Xu, Hai-Chuan, 2014. "Collective behavior and options volatility smile: An agent-based explanation," Economic Modelling, Elsevier, vol. 39(C), pages 232-239.

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