Economic modeling using evolutionary algorithms : the effect of binary encoding of strategies

L.R. Waltman, N.J. Eck, van, Rommert Dekker, U. Kaymak

Research output: Contribution to journalArticleAcademicpeer-review

12 Citations (Scopus)

Abstract

We are concerned with evolutionary algorithms that are employed for economic modeling purposes. We focus in particular on evolutionary algorithms that use a binary encoding of strategies. These algorithms, commonly referred to as genetic algorithms, are popular in agent-based computational economics research. In many studies, however, there is no clear reason for the use of a binary encoding of strategies. We therefore examine to what extent the use of such an encoding may influence the results produced by an evolutionary algorithm. It turns out that the use of a binary encoding can have quite significant effects. Since these effects do not have a meaningful economic interpretation, they should be regarded as artifacts. Our findings indicate that in general the use of a binary encoding is undesirable. They also highlight the importance of employing evolutionary algorithms with a sensible economic interpretation.
Original languageEnglish
Pages (from-to)737-756
Number of pages20
JournalJournal of Evolutionary Economics
Volume21
Issue number5
DOIs
Publication statusPublished - 2011

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