Agent-based Versus Macroscopic Modeling of Competition and Business Processes in Economics and Finance

Abstract

We present examples of agent-based and stochastic models of competition and business processes in economics and finance. We start from as simple as possible models, which have microscopic, agent-based, versions and macroscopic treatment in behavior. Microscopic and macroscopic versions of herding model proposed by Kirman and Bass new product diffusion are considered in this contribution as two basic ideas. Further we demonstrate that general herding behavior can be considered as a background of nonlinear stochastic model of financial fluctuations.