AGENT-BASED MODELING IN DECISION - MAKING FOR PROJECT FINANCING

Authored by Emil Scarlat, Marcel Bolos, Ioana Florina Popovici

Date Published: 2011

Sponsors: No sponsors listed

Platforms: No platforms listed

Model Documentation: Other Narrative Mathematical description

Model Code URLs: Model code not found

Abstract

Utility is a concept used by economic theory to characterize human decision-making. Project financing implies a complex decision-making process that is based on an agent's choice of financial sources. Selecting between various financing options is guided by risk and reward. These two criteria make up the value of each project financing option. The differences of value between options offering various utilities to the subject are the ones that set in motion the entire decision-making mechanism. The one that offers the highest utility is preferred to “homo oeconomicus”. This is characterized by rational behavior, directed towards maximizing its utility and lays the foundation of the classical economic theory. Modern economic theories such as game theory or behavioral finance reveal different facets of human decision behavior. Agent-based modeling uses the synergy between the classical and modern theories to simulate decision-making process.

Tags

Agent-based modeling Decision - making strategic behavior timing project evaluation