Artificial markets: A review and assessment of a new venue for innovation research

Artificial markets are an emerging form of agent-based social simulation in which agents represent consumers, firms, or industries interacting under simulated market conditions. We review the literature on these models and analyze their strengths, weaknesses, opportunities, and threats with special focus on consumers. We identify several promising applications such as forecasting future market behavior, exploring market dynamics, conducting massively parallel market analysis, gaming organizational strategies for volatile new markets, and profiling products and services which do not currently exist, but which markets are poised and ready to accept. We conclude with seven recommendations to help guide the development of artificial markets as a venue for technological innovation research.