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The classic DSGE economic models did a pretty bad job of anticipating the crash, in part because they assumed a return to some form of market equilibrium. Fans of agent-based modelling (ABM), which have lots of autonomous agents following simple behavioural rules and adapting to their environment, think it could do a better job of simulating the effects of crashes, herd-like behaviour and other non-linear phenomena that characterised recent events.
Made by Lago di Garda, with thanks to Nadia. (39)
Padenghe, Italy 2010-07-21
Client: The Economist Newspaper, London
Link: 
www.economist.com
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