NK Simulation Modeling

Abstract

Launched and developed primarily by Kauffman from the end of sixties, NK simulation modelling candidates for capturing networks dynamics. Grounded in reference to biological networks, it has aroused a grate and durable interest in economics and management sciences too. This methodology is split into a version focused on studying proper Boolean networks dynamics, whose trajectories are substantially conditioned by Boolean functions, and a (much more frequented) version focused on systems co-evolutionary paths driven by the search for optimizing its fitness value. Besides the unquestionable value of Kauffman's work for the theoretical implications on evolutionary biology and the strong interest for economics and management sciences, in this chapter failures and limitations of both NK modelling versions are discussed. In particular, it is shown that as applications try to be more realistic, this modeling becomes hardly treatable from a computational point of view. On the other hand, it is underlined that, especially the fitness landscape version, NK simulation modelling is very useful to show general aspects of system's dynamics, and the impossibility to find general optima (excepted for very special and unrealistic cases). This result sounds a sharp criticism to general economic equilibrium, and it is perfectly consistent with Simon's contributions.