New Economics: Initial Sims

Abstract
Simple market exchange simulations were modelled.

• Initial simulations show that Relative Sacrifice is the most efficient way for a market to benefit its participants. However Barter is also an extremely efficient method.
• Key features of markets are the minimum wealth. We do not want individuals to be sacrificed by the system. But also the maximum wealth and median. 

Aim
Which method of interaction between market participants (Traders) arrives at the "best" satisfaction.

Method
A game was modelled in c#

• Traders own things. Initial model gives everyone same portfolio size.
• These things have a fixed number of types.
• Each trader has a "Desire Profile". This is a number for each type of thing. The higher the number the more they want that thing. This could be measured in reality by asking people to give a number between 0-100 indicating how much they like something.
• Satisfaction is the total desire achieved.

Since we wish to arrive at a result quickly every entity was compared to every entity. The owners of the entities were then asked to decide what they wanted to do.

Interaction Types

Barter : If both participants will benefit from the exchange then the ownership was exchanged.

Relative Barter: Same as barter but the cost of the exchange is relative to what you have.

Sacrifice: If the other participant benefited then the ownership was given.

Relative Sacrifice: Same as sacrifice but the cost of the giving is relative to what you have.

Giving to Poor: Same as Sacrifice, but giving only where result didn't make other more satisfied than myself.

Max Exchange: Same as Barter, but comparing traders (instead of entities) and executing the most beneficial trade. Purpose to see if a more optimal solution was possible.

Initial simulation parameters:

• Number traders = 20
• Portfolio size = 20 (400 entities in market)
• Number of entity Types = 10
• Number passes = 3. All strategies actually achieve optimum in 1 pass.
• Monty Carly replications = 10

Results & Discussion

Barter

If you meet someone who has something you want, and you have something they want then swap. Barter is a solid system. Everyone improves, although some not as much as others.

Relative Barter

Exactly the same as Barter. Relative makes decision relative to existing portfolio. In barter portfolio size doesn't change (1 in 1 out) so relative makes almost no difference.

 Sacrifice

If you meet someone who wants something you have got more than you the give it to them. This system produces the richest and poorest individuals of all systems. That is the individuals with the greatest wants exploit those with lesser wants. This strategy differs from barter in that portfolio size changes, resulting in some individuals having almost nothing. This is more realistic as this is very much the problem in economics.

It appears then that we should introduce some measure of "neediness." Not everyone needs the same amount. Some are happy with a bicycle some unhappy even with a Ferrari. Wants is actually relative in reality. If you already have a lot, then you need more to make that difference.

Giving To Poor 

Same as Sacrifice, but we only give if the result of the transaction doesn't make me poorer than the recipient. This strategy is the most egalitarian resulting in everyone having the same. However everyone is also significantly poorer than the poorest in the Barter system.

Relative Sacrifice

Same as Sacrifice but cost of giving is weighted by current wealth. See Mark 12:42 Jesus says "Truly I tell you, this poor widow has put more than all the others into the treasury" referring to a poor widow who gave only two small coins.

This system results in both the second wealthiest and the most wealthy poor of any system here.

Maximum Exchange

Tries a different approach to comparison. Instead of each entity being compared with each entity, traders were introduced and they compared their entire portfolios and selected the exchange vector with the biggest magnitude. This made only a trivial improvement on Barter.

Following Studies

1. Need to look at portfolio size. The more successful strategies have flexible portfolios.
2. Need to look at neediness. How do we look at individuals with high desire profiles? Are the easier to please and things mean more to them, or are they parasitic as they win in exchanges because they want so much?
3. Rent. Introduce rental mechanism. Entity can be owned by one person, but possessed by another. Reference here to posts on John Locke and how ownership and possession must be different for rent and capitalism to work. The owner gets an income from the possessor, but the possessor gets the satisfaction of actually possessing.
   This underpins capitalism as employees effectively rent the company from the owners to do their days work. The salary corresponds to the satisfaction, and the profit corresponds to the rent.
4. Consumables. Production and Consumption. In reality entities are made, and consumed. So have "Machine" entities that reproduce something. Effectively if I own a "printing press" entity I can make "book" entities. If a press needs a worker, then the owner of 2 presses can only make 1 book as they are only 1 worker. In Capitalism I may own 2 presses, but I rent possession of one to a worker.
5. The system has inefficiency as exchanges may be very unequal so potential value is being lost from the system (check this). We split the exchange process into selling and buying for money. Exchanges can then be into and out of money.
6. Development of 5. I have an exchange class that takes bids and executes as many as it can. There was a problem in traders deciding which bids to make. Do I put a bid on everything I can in hope of good deal, or bid for the most desirable. And should I allow debt in case I create too many bids and they all execute. How to limit debt? Perhaps copy real world and lend proportionally to assets.
7. Desire is money. In the initial incomplete monetary simulation the desire profile became identical with the price. However in view of what has emerged here, perhaps desire must be relative to existing portfolio. If we own very little, then small things now become much more important. The question remains is this a good thing or a bad thing. If small things mean more, then the poor achieve the same as the rich with less. Regarding the environment, the economy as a whole becomes less demanding.

Project files: Github repository
Not threaded nor optimised.