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Journal of Evolutionary Economics

, Volume 21, Issue 5, pp 737–756

First Online: 09 June 2010

Abstract

We are concerned with evolutionary algorithms that are employed for economic modeling purposes. We focus in particular on evolutionary algorithms that use a binary encoding of strategies. These algorithms, commonly referred to as genetic algorithms, are popular in agent-based computational economics research. In many studies, however, there is no clear reason for the use of a binary encoding of strategies. We therefore examine to what extent the use of such an encoding may influence the results produced by an evolutionary algorithm. It turns out that the use of a binary encoding can have quite significant effects. Since these effects do not have a meaningful economic interpretation, they should be regarded as artifacts. Our findings indicate that in general the use of a binary encoding is undesirable. They also highlight the importance of employing evolutionary algorithms with a sensible economic interpretation.

KeywordsAgent-based computational economics Evolutionary algorithm Genetic algorithm Binary encoding Premature convergence JEL ClassificationC63 C73 D43 D83  Download fulltext PDF



Author: Ludo Waltman - Nees Jan van Eck - Rommert Dekker - Uzay Kaymak

Source: https://link.springer.com/







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