KB-ECON — Economics knowledge base

Entries

• 10 September 2026

  Agent-based Computational Economics: markets made of software agents, from the Iowa State laboratories of 2001-2005 to central banks and language-model agents in 2026

  If you model an economy with one representative agent, here is what changes when you give it thousands — from 2001 to today's LLM agents.

  Agent-based computational economics builds economies out of thousands of software agents that set prices, search, learn and sometimes fail, instead of assuming that markets clear. This entry synthesises nine founding papers from 2001-2005 (Tesfatsion's laboratories and the zero-intelligence traders) and updates the picture to 2026: central banks now run such models for housing policy, stress tests and forecasting, and language-model agents are the newest, least validated, generation.