The New Palgrave Dictionary of Economics Online

Agent-based models consist of purposeful agents who interact in space and time and whose micro-level interactions create emergent patterns. Agent-based models consist not of real people but of computational objects that interact according to rules. The four primary features of agent-based models – learning, networks, externalities, and heterogeneity – though previously far from neoclassical economics, have become part of the mainstream. Agent-based models allow us to consider richer environments that include these features with greater fidelity than do existing techniques. They occupy a middle ground between stark, dry rigorous mathematics and loose, possibly inconsistent, descriptive accounts.