Herbert Simon and Agent-Based Computational Economics

Abstract

In this article, we review the development of agent-based computational eco-nomics (ACE) in light of Herbert Simon's lifetime contributions to a variety of sci-entific areas. We take an integrated view of Simon's contributions to economics, computational-theoretic underpinnings of bounded rationality (algorithmic foun-dations of behavioral economics), artificial intelligence, expert systems, problem-solving and decision-making heuristics and cues, near decomposability (modular-ity) and complex systems. We address how agent-based economic and financial modeling has developed along each of the aforementioned " Simon dimensions " over the last two decades. At the end, we discuss the possible implications of the legacy of Simon for the future of ACE.