Starting from some regularities of the Boulogne s/mer fish market, the model proposed here shows that in many circumstances the collective behavior may be ‘reasonable’ whereas the individuals may not be so. The properties which are empirically clear at the aggregate level are not necessarily derived from similar properties at the individual level. Thus, the macroscopic outcomes of the Boulogne s/mer fish market are not directly derived by any of the individual component involved, but are the self-organized outcomes of the agents’ interaction. The simple interaction of noisy and myopic agents leads the system to stabilize itself.
One of the main goal of economics is to understand how the myriad of disparate individual economic activities is coordinated. In order to achieve a coherent behavior, a representative agent framework is usually adopted in most macro-models. This approach reduces, via reductionism, aggregate entities to concepts and knowledge for the lower-level domain of the individual agent [1]. By doing so, the reductionist paradigm blocks from the outset any understanding of the interplay between the micro and macro levels. As a consequence, the differences between the overall system and its parts remain simply incomprehensible from the viewpoint of this approach, which assumes equilibrium and rules out any coordination problem.
In order to understand how a macro coherent behavior may emerge from ‘irregular’ individual behavior economists began to allow for the interactions of agents. Since interaction depends on differences in information, motives, knowledge and capabilities, this implies heterogeneity of agents and, as a consequence, for externalities. This globally; thus the organization is achieved in a way that is parallel and distributed (no element acts as a central coordinator). Self-organization [2], i.e. a process where a structure appears in a system without a central authority or external element imposing it, replaces the invisible hand.
According to this view, a market economy can be analyzed as a self-organizing entity ([3]; F. Hayek’s catallaxy describes a ‘self-organizing system of voluntary co-operation’.) In many complex systems in nature, there are global phenomena that are the irreducible result of local interactions between components whose individual study would not allow us to see the global properties of the whole combined system. Thus, a growing number of researchers show that many macro properties of the economic system are not directly encoded by any of the single components involved, but are the self-organized outcomes of the interactions of the components. Thus, given the presence of imperfections in the markets organization, economic dynamics is the result of the communication and interaction of a myriad of heterogeneous agents and not the fruit of some invisible hand optimal process. The properties, which are empirically evident at the aggregate level, are not derived from similar properties at the individual level: the macro or aggregate behavior cannot be simply derived from underlying rational microfoundations.
The Boulogne s/mer fish market constitutes an ideal environment for studying the coordination problem. In fact, 2 sub-markets exist (auction and negotiated), where suppliers and buyers meet, setting quantities and prices in a very decentralized way. Aggregate relationships (such as the ratio of the participants to the 2 markets and the price-quantity relationship) are globally stable, but do not to reflect the behavior of individual agents, which is indeed very heterogeneous and erratic.
Anticipating some conclusions, we might say that:
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The market reaches a satisfying position, that is on average the quantity of unsold fish is less than 2%;
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The system achieves a stable aggregate behavior even if individual behavior is very erratic1 (similarly to Ref. [7]).
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The stable aggregate relation can be defined as efficient. It does not reflect the behavior of individual agents, whose behavior is indeed very heterogeneous and, sometime, inefficient.
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There is not ‘one price’, such as the neoclassical equilibrium price, (see Ref. [8]), but still a negative relationship between price and quantities holds true.
The rest of this paper is organized as follows. In the next sections we describe the Boulogne s/mer fish market and its stylized facts; in Section 3 we present the model, the agents’ behavior and the results of the simulation. Section 4 concludes.
The model proposed in this paper is a toy model that relies on a number of exogenously imposed rules. Its purpose is not to describe the behavior of real agents in the fish market, but to identify the main condition under which individual choices lead to a constant and stable aggregate behavior. Particularly, we show that the macroscopic outcomes of the Boulogne s/mer fish market are not directly derived by any of the individual components involved, but are the self-organized outcomes of the agents interaction.
Both empirical and theoretical analyses of the Boulogne fish market show that the dynamics of a system tend by themselves to increase the inherent order of a system, letting agents behave without constraints.
