Evolving a simulated system of enterprises with jESevol and Swarm Pietro Terna pietro.terna@unito.it   Department of Economics and Finance “G.Prato” University of Torino - Italy Evolving a simulated system of enterprises with jESevol and Swarm web.econ.unito.it/terna web.econ.unito.it/terna/jes jESevol May 9-11, 2004 SwarmFest, CSCS, University of Michigan

_jES->jESlet and jESevol _______________________________________ jES jESlet and jESevol _jES->jESlet and jESevol May 9-11, 2004 SwarmFest, CSCS, University of Michigan

SwarmFest, CSCS, University of Michigan From jES … java Enterprise Simulator … to jESlet (with a didactic goal) and … jVE->jES … to jESevol, to simulate an evolving system of enterprises May 9-11, 2004 SwarmFest, CSCS, University of Michigan

_______________________________________ Overview May 9-11, 2004 SwarmFest, CSCS, University of Michigan

SwarmFest, CSCS, University of Michigan Overview 1/2 From jES (our java Enterprise Simulator), we have derived jESevol, or “Evolutionary java Enterprise Simulator”. jES is a large Swarm-based package[1] aimed at building simulation models both of actual enterprises and of virtual ones. jESevol simulates systems of enterprises or production units in an evolutionary context, where new ones arise continuously and some of the old are dropped out. Our environment is a social space with metaphorical distances representing trustiness and cooperation among production units (the social capital). The production is represented by a sequence of orders; each order contains a recipe, i.e. the description of the sequence of activities to be done by several units to complete a specific production. [1] Download last versions of jES, jESlet and jESevol from http://web.econ.unito.it/terna/jes overview 1 May 9-11, 2004 SwarmFest, CSCS, University of Michigan

SwarmFest, CSCS, University of Michigan Overview 2/2 Two units can cooperate in the production process only if they are mutually visible in our social network. Units that do not receive a sufficient quantity of orders, as well as the ones that cannot send the accomplished orders to successive units, disappear. New enterprises arise, in the attempt of filling the structural holes (Burt, 1992; Walker et al., 1997) of our social network. A complex structure emerges from our environment, with a difficult and instable equilibrium whenever the social capital is not sufficient. References Burt R.S. (1992), Structural Holes – The Social Structure of Competition. Cambridge, MA, Harvard University Press. Walker G., Kogut B., Shan W. (1997), Social Capital, Structural Holes and the Formation of an Industry Network, in Organization Science. Vol. 8, No. 2, pp.109-25. overview 2 May 9-11, 2004 SwarmFest, CSCS, University of Michigan

SwarmFest, CSCS, University of Michigan We look at an incomplete production system continuously adapting itself to the reality coming from the global demand of the market … evolving system … while new firms arise and old ones are dropped out To produce goods, supply chains are created and modified, according to the changes in exiting firms May 9-11, 2004 SwarmFest, CSCS, University of Michigan

_______________________________________ jES basics May 9-11, 2004 SwarmFest, CSCS, University of Michigan

SwarmFest, CSCS, University of Michigan Three formalisms WD side or formalism: What to Do DW side or formalism: which is Doing What WDW formalism: When Doing What WD, DW, WDW May 9-11, 2004 SwarmFest, CSCS, University of Michigan

SwarmFest, CSCS, University of Michigan A dictionary unit = a productive structure; a unit is able to perform one of the steps required to accomplish an order order = the object representing a good to be produced; an order contains technical information (the recipe describing the production steps) recipe = a sequence of steps to be executed to produce a good dictionary May 9-11, 2004 SwarmFest, CSCS, University of Michigan

_______________________________________ A flexible scheme in jESevol May 9-11, 2004 SwarmFest, CSCS, University of Michigan

SwarmFest, CSCS, University of Michigan DW Units … 2 1 3 1 … on a toroidal space 4 2 DW: a flexible scheme 1 Each unit is able to do a specific step … 5 (left and right borders and top and bottom ones are close together) 3 May 9-11, 2004 SwarmFest, CSCS, University of Michigan

SwarmFest, CSCS, University of Michigan WD … of a recipe with the recipes of the orders (what to do) expressed as sequences of numbers; orders with recipes are randomly generated with different lengths and structures 1 3 2 4 5 3 4 3 5 1 1 … WD: recipes May 9-11, 2004 SwarmFest, CSCS, University of Michigan

DW and WD moving around among units 2 1 3 2 4 1 3 1 1 3 2 4 4 2 1 3 2 4 moving recipes how to choose ? 1 1 3 2 4 5 3 lack of visibility Visibility is a metaphorical representation of trustiness and cooperation in a social network; when global visibility increases, we have more “social capital” May 9-11, 2004 SwarmFest, CSCS, University of Michigan

SwarmFest, CSCS, University of Michigan Visibility increases with the time (initial visibility is randomly chosen) new units appear randomly (enterprise creation) with strategic relationships … … or alone visibility changes visibility and … some units are dropped out May 9-11, 2004 SwarmFest, CSCS, University of Michigan

SwarmFest, CSCS, University of Michigan The left (blue) bar of each unit reports the number of waiting orders (do be done) The right (red) bar of each unit reports the number of unsent products, due to the fact that a unit able to do the required step does not exist or is not visible … bars The down (grey) bar of each unit reports the number of consecutive clock ticks in which the unit has been idle If > maxInactivity the unit is dropped out and all unsent products are lost If > maxUnsentProducts the unit is dropped out and all unsent and waiting products are lost May 9-11, 2004 SwarmFest, CSCS, University of Michigan

_______________________________________ An introductory case, robust and fragile _an introductory case May 9-11, 2004 SwarmFest, CSCS, University of Michigan

the parameters, robust introductory case Introductory robust case potentialUnitTypes 5 unitGenerationInitialP 1 potentialUnitNumberPerType 2 newUnitGenerationP 0.0 interVisibilityMinLevel 0 increasingVisibilityStep 0.0 maxInactivity 10 maxUnsentProducts 10 max n. of types and max presence per type, here 5 * 2 with p=1 p of a new unit in each cycle, with a random type in this basic case all units are visible and visibility does not change the parameters, robust introductory case we assume that an actual firm is dropped out from the market after three months of inactivity, so 10 ticks = 3 months of history Why 10? Our recipes have here maxStepNumber =5 and maxStepLength=2; potentially, in 10 ticks, each unit can receive an order, but only as a limit case; with this parameters the system can be exposed to a complete crash similarly … May 9-11, 2004 SwarmFest, CSCS, University of Michigan

introductory case: robust case Introductory robust case only 5 units kept alive introductory case: robust case 1,000 ticks = 25 years of actual time PRODUCTION global/potential final/potential final/global May 9-11, 2004 SwarmFest, CSCS, University of Michigan

the parameters, fragile introductory case Introductory fragile case potentialUnitTypes 10 unitGenerationInitialP 1 potentialUnitNumberPerType 1 newUnitGenerationP 0.0 interVisibilityMinLevel 0 increasingVisibilityStep 0.0 maxInactivity 10 maxUnsentProducts 10 max n. of types and max presence per type, here 10 * 1 with p=1 the parameters, fragile introductory case Our recipes have here maxStepNumber 10 and maxStepLength 1 May 9-11, 2004 SwarmFest, CSCS, University of Michigan

introductory case: fragile case Basic fragile case no units kept alive introductory case: fragile case 150 ticks < 4 years of actual time PRODUCTION global/potential final/potential final/global May 9-11, 2004 SwarmFest, CSCS, University of Michigan

__________________________________________________ A study case, with 3 versions: (i) basic, (ii) increasing social capital, (iii) with greater financial intervention of the banking system _a study case May 9-11, 2004 SwarmFest, CSCS, University of Michigan

the parameters, basic study case (i) basic study case, starter file 5 in jESevol 0.3.00 potentialUnitTypes 5 unitGenerationInitialP 0.8 potentialUnitNumberPerType 2 newUnitGenerationP 0.8 interVisibilityMinLevel 1 increasingVisibilityStep 5 maxInactivity 10 maxUnsentProducts 10 max n. of types and max presence per type, here 5 * 2 with p=0.8 p of a new unit in each cycle, with a random type in this study case, min visibility is 1, i.e. at least one common patch; visibility increases of 5 patches in each tick the parameters, basic study case Our recipes have here maxStepNumber 5 and maxStepLength 2 May 9-11, 2004 SwarmFest, CSCS, University of Michigan

SwarmFest, CSCS, University of Michigan (i) basic study case, starter file 5 in jESevol 0.3.00 a relevant variability in the number of units (social costs), with the trace of a cycle a medium performance in term of potential production study case: basic 1,000 ticks = 25 years of actual time PRODUCTION global/potential final/potential final/global some form of structure seems to emerge May 9-11, 2004 SwarmFest, CSCS, University of Michigan

the parameters, increasing social capital study case (ii) Increasing social capital study case, starter file 5.2 in jESevol 0.3.00 potentialUnitTypes 5 unitGenerationInitialP 0.8 potentialUnitNumberPerType 2 newUnitGenerationP 0.8 interVisibilityMinLevel 1 increasingVisibilityStep 10 maxInactivity 10 maxUnsentProducts 10 max n. of types and max presence per type, here 5 * 2 with p=0.8 p of a new unit in each cycle, with a random type in this study case, min visibility is 1, i.e. at least one common patch; visibility increases of 10 patches in each tick the parameters, increasing social capital study case Our recipes have here maxStepNumber 5 and maxStepLength 2 May 9-11, 2004 SwarmFest, CSCS, University of Michigan

study case: increasing social capital (ii) Increasing social capital study case, starter file 5.2 in jESevol 0.3.00 a relevant variability in the number of units (social costs), but now with an evident cycle a good (and increasing) performance in term of potential production study case: increasing social capital 1,000 ticks = 25 years of actual time PRODUCTION global/potential final/potential final/global evident structures emerge May 9-11, 2004 SwarmFest, CSCS, University of Michigan

the parameters, bank system study case (iii) Greater financial intervention of the banking system study case, starter file 5.3 in jESevol 0.3.00 potentialUnitTypes 5 unitGenerationInitialP 0.8 potentialUnitNumberPerType 2 newUnitGenerationP 0.8 interVisibilityMinLevel 1 increasingVisibilityStep 5 maxInactivity 15 maxUnsentProducts 10 in this study case, min visibility is 1, i.e. at least one common patch; visibility is increases of 5 patches in each tick the parameters, bank system study case we assume that an actual firm is dropped out from the market after 15 ticks of inactivity, instead of 10 Our recipes have here maxStepNumber 5 and maxStepLength 2 May 9-11, 2004 SwarmFest, CSCS, University of Michigan

study case: bank system study case (iii) Greater financial intervention of the banking system study case, starter file 5.3 in jESevol 0.3.00 a less relevant variability in the number of units (reduced social costs), always with an evident cycle a good performance in term of potential production study case: bank system study case 1,000 ticks = 25 years of actual time PRODUCTION global/potential final/potential final/global evident structures emerge May 9-11, 2004 SwarmFest, CSCS, University of Michigan

Stability; perspectives Cases i, ii and iii are stable also running them for 4,000 ticks (one century)! Short term enhancements A lot of investigation is necessary on cases (i), (ii) and (iii) modelling explicitly the banking system, with the concurrent effects of the cases of bankruptcy in firms and banks Using a Genetic Algorithm tool to choose units to be created at each tick and where to place them; the fitness will be generated by jESevol itself, from different points of view: the whole economic system, a specific unit, a cluster of units, … Stability; perspectives May 9-11, 2004 SwarmFest, CSCS, University of Michigan

Let run case 5.2 or 5.3 at the question time! address again pietro.terna@unito.it   web.econ.unito.it/terna web.econ.unito.it/terna/jes May 9-11, 2004 SwarmFest, CSCS, University of Michigan