Agent-based models of long-distance trading societies

Abstract

Studying historical trading societies helps us to identify the institutions (e.g. rules) and characteristics that lead to their success or failure. Historically, long-distance trading societies, as a more particular example of trading societies, have been established in various parts of the world. Many of these societies were successful in certain aspects, and interestingly, a number of these societies were successful, despite having different characteristics and institutions. This thesis aims to identify some of the institutions and characteristics that contributed to their success. We use an agent-based simulation model to identify the key characteristics that impacted the success of two long-distance trading societies. The objective of this study is to develop suitable models of these societies that can be used for systematic studies of their characteristics. Two long-distance trading societies studied in this thesis are the British East India Company and the Armenian traders of New-Julfa, both of which flourished during the 17th and 18th centuries. In this thesis, we conduct a comparative study of the two societies, based on historical evidence and contemporary literature that provide empirical support. Based on the comparative study, we have identified three overarching themes that distinguish these societies: 1) the contractual schemes used and their environmental characteristics; 2) the apprenticeship programmes and vocational schools used; and 3) the institutional mechanisms used. This thesis presents three models developed corresponding to the three themes, based on the presented comparative study of the societies. The first model developed was based on game theory and simulates the impact of contractual schemes and environmental circumstances on the two trading societies’ success. In the contractual scheme, we assessed the impact of payment schemes (e.g. profit-sharing), penalties (e.g. dismissal for wrongdoing), and hiring and firing schemes, in the context of open and closed societies, on the success of the society. As a metric of societal success, we considered rule conformity, sustainability, profitability, and improving societal skills. As a next step, we model the impact of apprenticeship programmes and vocational schools on the societal success (i.e. maintaining societal skill levels, programme completion rate, and increasing societal income). In this model, we consider the impact of different trader and trainer types (e.g. artisans), along with various policies for managing recruits (e.g. training societal members and hiring from other societies). In our last model, we extend the beliefs-desires-intentions (BDI) mental architecture to model the impact of institutional mechanisms (e.g. fairness) on the success of these societies. Beyond creating models (methodological contribution) of these societies to demonstrate the influence of characteristics on the success of the societies, our work provides practical contributions, such as a) insights into the positive impact of profit-sharing on a company’s profitability; b) the aspects that should be considered to have successful apprenticeship programmes; and c) insights into designing societal rules to deal with societies’ lack of transparency.