Extensions: Variable Time Horizon of Selection

Abstract

The model of regional monopolies discussed up to now, is too simple in at least one point: It is no satisfactory model of economic learning via GAs, because there is no state dependency. It has been mentioned above that the state dependency of individual economic success is an important characteristic of almost every economic problem. Even more, it is a major characteristic of models of economic GA learning. For example, the profit of a supplier in a market (except of a monopolistic market) does not only depend on the quantity of the good the supplier offers, but also on the market price. The market price, in turn, depends on the aggregate supply on the market, i.e. on the quantities all suppliers offer. This means that the profit of every single supplier is inseparably connected to each action of every member of the market and by that, to the state of the whole economy¹.

A technical analysis of the effect of state dependency can be found in Dawid (1994) and Riechmann (2000)