Simulating Shocks with the Hypercycles Model of Economic Production

Padgett’s hypercycles model of economic production (Padgett et al. 2003) is an agent-based simulation that demonstrates the emergence of novel forms of social organisation among limited-intelligence agents. In this paper we argue that it can be extended to explore issues of resilience and the responses to shocks in complex systems of agent-environment interactions. Based on learning by doing, a simple search heuristic enables a population of firms to adapt and find system states containing a collectively self-sustaining subset of firms with production rules and mix of materials in the environment. The self-sustaining systems Padgett finds persist in spite of variability from stochastic processes in the model. However Padgett has not yet explored the model’s responses to exogenous changes. We here outline experiments to simulate exogenous shocks. So far, the systems have proved highly resilient to the quantitative shocks, that is, to quantitative changes of various sizes in stock levels of rules and of environmental materials. However, systems were less resilient to qualitative changes to the structure of the emergent systems, namely in this paper changes to network links between firms. Suggested future developments include investigating the analogy between resilience and adaptive learning or search, and interpreting the model in the contexts of material flow analysis and industrial symbiosis.