An Agent-Based Model of Interactions in the Payment Card Market

Abstract

Summary. We develop an agent-based model of the competition between payment cards by focusing on the interactions between consumers and merchants determining the subscription and usage of cards. We find that after a short period of time the market will be dominated by a small number of cards, even though there do not exist significant differences between cards and the market is fully competitive. In contrast to the existing literature we focus on the dynamics of market shares and emergence of multi-homing rather than equilibrium outcomes.

How to Identify Investor's types in real financial markets by means of agent based simulation

“…In fact the state-ofthe-art literature shows that agent based modeling is a flexible modeling methodology for simulating several types of domains [3,4,27,7,10] including consumer markets [26], economies [8] or societies [9] and financial time series [2,11,18]. Moreover examples of how evolutionary computation [5,6] and agent based modeling can be used to deal with economic tasks can be found in [1,25]. The cited papers have been selected with the only intent to provide examples of the listed approaches and without any claim to be an exhaustive list of previous work on the topic.…”

“…According to each investor's type, many agents (Financial Agents) are then created in the simulation with similar but not identical behavior. The four types of investors that we model can be thought as: individual investors (and the likes), banks (and the likes), hedge funds (and the likes), and central banks 1 1 A little thought objection to our choice to include Central Banks among the actors 8 (and the likes). They differ in term of the size of the assets they can invest in financial markets and for their risk/reward appetite.…”

Market structure and information in payment card markets

“…Furthermore, the way competition enables merchants to attract consumers is usually not adequately considered. Addressing this issue, Alexandrova-Kabadjova et al [29] developed a multi-agentbased model to study competition among several competitors, which was further extended in [30,31], where the pricing strategy of the competitors is obtained by an evolutionary computation algorithm; see [32]. This line of research is being taken further in the present paper.…”

Profit-Maximizing Strategies for an Artificial Payment Card Market. Is Learning Possible?

“…Following a different approach, in order to gain better insight of the market, in [15] the authors have developed an agent-based model, which was motivated from [8]. The model simulates the interactions at the point of sale among consumers and merchants.…”