Agent-based economic modelling with iterated prisoner´s dilemma

This paper presents a method on modelling the economy market using agent-based representation and iterated prisoner´s dilemma (IPD). While IPD has been widely used in various problems, there is little work done in modelling the dynamics of market behaviour and it is the main objective of this work to fill in this gap. We create a simulated market environment with agents acting as firms to perform transactions among each other with chosen IPD strategy. From the empirical results, we investigate the strategic interactions among different firms in relation to real-world transaction scenario. In the concluding remarks, we present our observation on the qualities of a winning strategy.