Essays on the foundation and application of agent-based modeling in economics

Agent Based Modeling (ABM) is a powerful tool that holds the promise of being able to further our understanding of questions in economics that could previously not be answered, due to their nature. However, in order for its capabilities to be fully utilized, it must be formalized and distributed throughout the economic community. The second section of this dissertation presents several questions that we must answer to further this end, along with some cautions as to when ABM is appropriate. The third section explores the causes and roles of risk preferences. ABM is employed in order to answer the following question; How did differing risk attitudes evolve? Does the equilibrium distribution of risk attitudes relate to established notions of social welfare? Is it possible to adjust risk attitudes to compensate for any disparity between steady-state and optimal distributions? We find that while risk neutral risk attitudes maximize more utilitarian measures of social welfare, risk averse attitudes maximize a Rawlsian measure. When looking at a dynamic system, the type of reproduction system, and whether agents can accumulate wealth or not affects which type of risk preferences dominate. In the fourth section we present a model that analyzes the interaction of several types of agents in a complex market environment, from the initial product choice, through the period of peak popularity, to the eventual demise of the fad, using an ABM modeling technique. We are able to determine what characteristics of a product we must know in order to predict whether it will become a fad. The final section concludes.