An evolutionary game approach to energy markets

This paper presents the application of a new branch of economics theory-Evolutionary Games and Bounded Rationality-to young energy markets. The model is able to correctly represent: all traditional physical system characteristics; agent behavior, including bounded rationality, lack of information and learning capability; market dynamics and evolution, including responses to players' actions, regulations evolutions and consumer reactions. A case study with a realistic market illustrates the proposed model. More than just an equilibrium solution, the proposed model is able to completely describe the process that led to this point, including agent learning dynamics (with successes and failures) and market responses.