Eric Bonabeau, Harvard Business Review, March 1, 2002

Nasdaq worked with BiosGroup to develop a computer program that simulated proposed changes they wanted to make in regard to the tick size of their trading. It was no ordinary program; the software created thousands of virtual individuals to represent market makers, institutional investors, pension fund managers, day traders, casual investors, and other market participants. Each of those software agents made decisions to buy and sell using real-world strategies. The technology, called agent-based modeling, enabled Nasdaq to explore stock market dynamics that pure mathematical methods could never unpick. And they’re not the only ones who have benefitted from the use of agent-based modeling. […read more]