Agent-based Computational Economics for Research in Management Accounting

What is it about?

In the last decades, the field of Economics has witnessed the advent of Agent-Based Computational Economics (ACE). While ACE has been applied extensively to various domains of Managerial Science, its application to Management Accounting Research (MAR) has remained limited so far. The paper provides an overview of opportunities and difficulties that ACE may have for research in management accounting and introduces a framework that researchers in management accounting may employ when considering ACE as a paradigm for their particular research endeavors.

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Why is it important?

The paper presents a framework for the researcher in management accounting which builds on the two key elements of ACE: First, a set of theoretical assumptions on economic agents whose core is the bounded rationality of economic actors. This results in taking humans’ heterogeneity and their capabilities of problem-solving into account which leads to more realistic models of humans than captured in more mainstream schools of economic thought. Second, ACE employs agent-based modeling which differs from other prominent modeling paradigms in economics. Based on these two elements, the paper proposes five key features that could make ACE a promising research paradigm for management accounting. These are - realistic behavioral assumptions about the rationality of decision-makers in organizations, - rich institutional arrangements and rich interactions capturing key characteristics of organizations, - rich contingencies like market turbulences, crises, technological change, - processual perspective allowing to capture, for example, learning processes and emergence, and - bridging between behaviour and phenomena at the level of individuals (micro-level) and their consequences at the systems’ level (macro-level).

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