Sensitivity analysis of agent-based models: a new protocol

Authors: Emanuele Borgonovo, Marco Pangallo, Jan Rivkin, Leonardo Rizzo, Nicolaj Siggelkow

Journal: Computational and Mathematical Organization Theory, 2022


Agent-based models (ABMs) are increasingly used in the management sciences. Though useful, ABMs are often critiqued: it is hard to discern why they produce the results they do and whether other assumptions would yield similar results. To help researchers address such critiques, we propose a systematic approach to conducting sensitivity analyses of ABMs. Our approach deals with a feature that can complicate sensitivity analyses: most ABMs include important non-parametric elements, while most sensitivity analysis methods are designed for parametric elements only. The approach moves from charting out the elements of an ABM through identifying the goal of the sensitivity analysis to specifying a method for the analysis. We focus on four common goals of sensitivity analysis: determining whether results are robust, which elements have the greatest impact on outcomes, how elements interact to shape outcomes, and which direction outcomes move when elements change. For the first three goals, we suggest a combination of randomized finite change indices calculation through a factorial design. For direction of change, we propose a modification of individual conditional expectation (ICE) plots to account for the stochastic nature of the ABM response. We illustrate our approach using the Garbage Can Model, a classic ABM that examines how organizations make decisions.

Leave a Reply

Your email address will not be published. Required fields are marked *

Other news

  • Assessing the EU’s provisional agreement on ESG rating regulations

    Assessing the EU’s provisional agreement on ESG rating regulations

    Author: Jacob Margolis On 5 February 2024, the European Council and European Parliament collectively reached a temporary agreement on a proposal for regulations on environmental, social, and governance (ESG) rating activities. Such activities provide investors with pertinent information about a firm’s sustainability across a number of metrics, including vulnerability to sustainability risks, the firm’s impact…

  • The challenges of the global minimum tax

    The challenges of the global minimum tax

    Author: Amedeo Rizzo The international tax landscape is undergoing a significant transformation with the proposal of a global minimum tax for multinational enterprises (MNEs). The Organisation for Economic Co-operation and Development (OECD) has conceived this initiative to combat international corporate tax avoidance, proposing a 15% minimum tax on large multinational groups. This proposal has gained…

  • The EU Foreign Subsidies Regulation: a Structural Change to the Internal Market

    The EU Foreign Subsidies Regulation: a Structural Change to the Internal Market

    Author: Amedeo Rizzo Journal: Stanford – Vienna Transatlantic Technology Law Forum, Transatlantic Antitrust and IPR Developments, Issue No. 1/2023 Abstract: The EU Foreign Subsidies Regulation (“FSR”) has been published on the 14th of December 2022 and entered into force on 12 January 2023. The Regulation creates a new regime with the objective of protecting the internal market…