120 Million Agents Self-Organize into 6 Million Firms: A Model of the U.S. Private Sector

An agent model is described at full-scale with the U.S. private sector, consisting of some 120 million agents. Using data on the population of U.S. firms the model is calibrated to closely reproduce firm sizes, ages, growth rates, job tenure and labor flows, along with several other empirically-important facts. It consists of a coalition formation model in which the Nash equilibria are dynamically unstable for sufficiently large coalitions. When agents are free to join coalitions where they are made better off there results a steady-state distribution of coalitions. The agent level is in perpetual disequilibrium but the aggregate level approaches a steady-state. This model represents a significant advance over conventional approaches to economic modeling, made possible by large-scale, parallel agent computing.