An agent-based model for designing a financial market that works well
Abstract excerpts:
Designing a financial market that works well is very important for developing and maintaining an advanced economy, but is not easy because changing detailed rules, even ones that seem trivial, sometimes causes unexpected large impacts and side effects.
The Steem blockchain economy seems to have taken a simple social media model and monetised it. The problems of those actions that take place on a standard un-monetised platform but are hidden by mods or algorithms have not been fully resolved.
A computer simulation using an agent-based model can directly treat and clearly explain such complex systems where micro processes and macro phenomena interact. Many effective agent-based models investigating human behavior have already been developed.
This is important in creating a Steem V2. No thorough pre-testing seems to take place, apart from testnets that need more bots with pre-programmed behaviour so as to simulate a larger population.
Recently, an artificial market model, which is an agent-based model for a financial market, has started to contribute to discussions on rules and regulations of actual financial markets. I introduce an artificial market model to design financial markets that work well and describe a previous study investigating tick size reduction. I hope that more artificial market models will contribute to designing financial markets that work well to further develop and maintain advanced economies.
Although this paper looks at the simpler system of financial trading markets, hence with limited behaviour by actors, such as buying and selling, given that Steem has very few functions available to users, this may be a profitable way to start.
The text itself
The economist John McMillan, who used game theory to investigate many markets, said “a market works well only if it is well designed”.
also,
The computer scientist Melanie Mitchell said, “economies are complex systems in which the simple, microscopic components consist of people buying and selling goods, and the collective behavior is the complex, hard-to-predict behavior of markets as a whole, such as fluctuations in stock prices”.
Blockchains with built-in economies, rather than dapps that sit on top of a chain, are an important experiment in the exchange of human work. Whether such chains will be built on the Steem-experience or not, this particular experiment has some lessons for the future.
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