Positions

• Director of CeNDEF 
• Research Fellow of the Tinbergen Institute
• Distinguished Lorentz Fellow NIAS
• President-elect Society for Computational Economics (SCE) 

Curriculum Vitae

• CV Cars Hommes

• Short Biography

Recent research grants

A list of projects and research grants can be viewed here. 

Education

• PhD in Mathematical Economics, University of Groningen, 1991. 
• MSc in Mathematics, University of Groningen, 1985 

Current Research Interests

Complex systems; bounded rationality; expectation formation and learning; heterogeneous agent modelling; bifurcations and chaos; evolutionary finance; behavioural macroeconomics; laboratory macroexperiments. 

My Recent Book "Behavioral Rationality and Heterogeneous Expectations in Complex Economic Systems " Published by Cambridge University Press 2013. The pdf file of the introductory chapters can be downloaded here.

Recent Interview by Perry Mehrling for the Institute for New Economic Thinking: 

Interview in: Barkley Rosser, Jr., J., Holt, R.P.F. and Colander, D. (Eds.), "European Economics at a Crossroads". 

Cars Hommes in VPRO’s "Labyrint." on February 15, 2012. 

Co-authors include:  

- William A. Brock , University of Wisconsin 
- John Duffy , University of Pittsburgh 
- Doyne Farmer , Santa Fe Institute 
- Marco Gallegati , Politechnic University of Marche 
- Andrea Gaunersdorfer , University of Vienna 
- Alan Kirman , GREQAM, Marseille 
- Barkley Rosser Jr. , James Madison University 
- Joep Sonnemans , University of Amsterdam 
- Gerhard Sorger , University of Vienna 

Recent Surveys:

• Assenza, T., Bao, T., Hommes, C.H. and Massaro, D. (2014), Experiments on expectations in macroecono-mics and finance, In: Duffy, J. (Eds.), Research in Experimental Economics, Volume 17, Emerald Press.
• Hommes, C.H. (2014), Behaviorally rational expectations and almost self-fulfilling equilibria, Review of Behavioral Economics 1 (inaugural issue), 75-97.
• Hommes, C.H. (2013), Reflexivity, expectations feedback and almost self-fulfilling equilibria: economic theory, empirical evidence and laboratory experiments, Journal of Economic Methodology special issue on Reflexivity and Economics: George Soros’ Theory of Reflexivity and the Methodology of Economic Science, 406-419.
• Farmer, J.D., Gallegati, M., Hommes, C., Kirman, A., Ormerod, P., Cincotti, S., Sanchez, A. and Helbing, D. (2012), A complex systems approach to constructing better models for managing financial markets and the economy, European Physcial Journal 214, 295-324.
• Hommes, C.H., (2011), The heterogeneous expectations hypothesis: some evidence from the lab, Journal of Economic Dynamics and Control 35, 1-24.

Editorial boards

Editor: 

• Journal of Economic Dynamics & Control (2002-2012) 

Associate Editor:

• Macroeconomic Dynamics (1997-);
• Computational Economics (1998 -);
• Journal of Economic Behaviour & Organization (2004-2012);
• Journal of Nonlinear Science (1999-2013);
• Quantitative Finance (2000-2004);
• Journal of Economic Interaction and Coordination (2006-);
• Complexity Economics (2012-) 

Honorary Editor

• Review of Behavioral Economics (2014-)

Nonlinear Economic Dynamics (MSc Econometrics)

• course description (download)
• E&F Chaos software (Download zipped Setup file)
• E&F Chaos manual (Download pdf file)

• Students of the University of Amsterdam should also check the Blackboard site for detailed information about the courses

MPhil Courses Tinbergen Institute 

TI126 Behavioral Macroeconomics 

Lecturers: Prof. C.H. Hommes (UvA) 

Period: Block I, September & October 2014 

Short subject description: 

The leading paradigm in macroeconomics assumes that economic agents (households, firms, investors) are perfectly rational in making their decisions. Experimental evidence and common sense indicate that this assumption is often too demanding. This course focuses on the analysis of macroeconomic models under “bounded” rationality, where agents violate full rationality but behave more in accordance with experimental evidence. 

Course content: 

• Animal spirits and boom and bust cycles 

• Bounded rationality and adaptive learning 

• Complex dynamics, chaos and bifurcations 

• Heterogeneous expectations and evolution in asset pricing and macroeconomic models 

• Macro laboratory experiments 

• Monetary policy and asset prices under bounded rationality

TI127 Complexity and Behavior

Lecturer: Prof. C.H. Hommes (UvA) and Dr. H. Houba (VU) 

Period: Block V: May & June 2015 

Short subject description: 

The leading paradigm in economic theory assumes that all economic agents (households, firms, investors) are perfectly rational in making their decisions. This leads to the standard representative rational agent model. In this course we consider the economy as a complex system with interacting boundedly rational heterogeneous agents. A central question will be: which emerging aggregate macro behavior arises through the interactions of individual decisions of boundedly rational heterogeneous agents at the micro level? 

Course content: 

• Introduction to complex dynamics, chaos and bifurcations 

• Animal spirits and boom and bust cycles 

• Adaptive expectations, learning and heterogeneous expectations 

• Contagion and the evolution of trust 

• Agent-based models 

• Macro laboratory experiments

NWO Complexity: Understanding financial instability through complex systems

Academic staff: dr. Marco van der Leij (postdoc), MSc Daan in 't Veld (PhD student)
The goal of the project is to understand the financial markets as complex dynamic systems, where large structural changes are critical transitions between different possible regimes of the system, instead of being caused by exogenous shocks. This joint work with Dutch Central Bank (De Nederlandsche Bank) aims at closing the theoretical gap of complex financial instability, which has important policy implications for evaluating and identifying potential threats to the existing markets. The means of the project include extensive theoretical work on complex financial models and experimental tests to the theoretical results. 

EU FP7 Projects

I.  EU FP7 CRISIS (Complexity Research Initiative for Systemic Instabilities)

Academic staff: dr. Domenico Massaro (postdoc)

The goal of the CRISIS project is to develop a pair of coupled agent-based modelsof the European economy, one for the financial system and one for themacro-economy. The agent-based approach to modeling looks at the economy from abottom-up perspective, modeling individual households, firms, and financial institutionsand the interaction networks that connect them. The project is explicitlydesigned to provide an integrated view of the financial system and themacro-economy, and to yield insights on the two-way interactions andtransmissions mechanisms between the two.  The role of CeNDEF UvA withinthe project is to run laboratory experiments to calibrate the agentdecision-making. These experiments will study the interaction of behavioralrules and the emergent aggregate phenomena they co-create in complex nonlinearmacro- and financial feedback systems. Examples of experiments includelarge-scale learning-to-forecast experiments and "crisis" laboratoryexperiments involving policy makers.

Webpage: http://www.crisis-economics.eu

II. EU FP7 RastaNEws (Macro-Risk Assessment and Stabilization Policies with New Early Warning Signals)

Academic staff: to be hired

The goal of theproject is to design a framework for a revised economic governance within theEU. The main directions of research will be: Financial markets as complexsystems driven by heterogeneous expectations; Macroeconomics beyond thetraditional dichotomy between short and long run; Limited asset marketparticipation and the interaction of fiscal and monetary policies in a currencyunion; Early warning indicators within the EMU surveillance mechanism. The roleof CeNDEF UvA within the project is to explore the properties (and exploit themfor policy design) of macroeconomic models with heterogeneous behavioral rulesand in particular with heterogeneous expectations. A special focus will be onthe consequences of expectational heterogeneity for the transmission andeffectiveness of monetary as well as fiscal policies. 

INET Grants

I. HexFiCs

 Academic staff:dr. Te Bao (postdoc)

CeNDEF UvA participates in two INETproject, which will result in two papers published In a peer-reviewed journal:

a) Experimental investigation ofthe housing market: Despite its obvious importance in the modern economy and itsrole in the latest financial crisis, experimental literature on the housingmarket is surprisingly scarce. The goal of this project is to conduct anexperiment, which would evaluate how the elasticity of supply is linked withthe possibility of occurrence and then the span of a bubble on the housingmarket. This is by now the most mature experimental design for this topic, andthe experiment itself can be easily extended for complex settings such as ahousing market within a DSGE economy.

b) Financial derivatives and risk:Financial derivatives are increasingly important in the modern financialmarkets. Traditional theory would claim that they are either neutral orbeneficial to the economy by allowing the economic agents to hedge the risk.Nevertheless the experience with the financial markets in the past two decadessuggests that some derivatives can be poisonous, as they create incentives foroverly risky investments. The goal of this project is to conduct an experimentwhich would directly test this issue. The specific design of the experiment isto compare the behavior of the experimental subjects who act in the financialmarkets with and without the risk hedging possible option.

Webpage: http://ineteconomics.org/grants/heterogeneous-expectations-and-financial-crises

II. INEXC

Academic staff: dr. Te Baom (postdoc)

The goal of the multinational INEXC projectis to coordinate the research and development of theories that could serve as arealistic alternative to the rational expectations hypothesis. Such analternative is crucial for the policy-makers, in order to evaluate marketregulations and their power in avoiding financial bubbles such as the one thattriggered the latest economic crisis. The role of CeNDEF UvAF in the project isthe experimental validation of coordination of heterogeneous expectations. Inparticular, we will focus on using laboratory experiments with human subjectsto study expectation coordination and to validate different expectationshypotheses and learning models.

Webpage: http://www.expectational-coordination.com/nodes/amsterdam/ 

Experimental Data

This page includes experimental data related to and analyzed in the following papers:

Data for Recent Experiments:

Positive and Negative Feedback Markets with Shocks

Bao, T., Hommes, C., Sonnemans, J. & Tuinstra, J. (2012), Individual expectations, limited rationality and aggregate outcomes, Journal of Economic Dynamics and Control 36, 1101-1120.  (Download the Excel Data)

Positive and Negative Feedback Markets with Constant Fundamentals

Heemeijer, P., Hommes, C.H., Sonnemans, J., and Tuinstra, J., Price stability  and volatility in markets with positive and negative expectations feedback: an experimental investigation, Journal of Economic Dynamics and Control, 2009, 33, 1052-1072. (Downloadthe Excel Data)

Data for Earlier Experiments:

Individual Cobweb Experiment

Hommes, C.H., Sonnemans, J. and Velden, H. van de, (2000), Expectation Formation in a Cobweb Economy: some one Person Experiments, In: Delli Gatti, D., Gallegati, M., and Kirman, A.P. (Eds.) Interaction and Market Structure, Springer Verlag Berlin (2000), 253-266.

Group Cobweb Experiment

Hommes, C.H., Sonnemans, J., Tuinstra, J. and Velden, H. van de, (2007), Learning in cobweb experiments, Macroeconomic Dynamics 11, S1, 8-33.

Group Asset Pricing Experiment

Hommes, C.H., Sonnemans, J., Tuinstra, J. and Velden, H. van de, (2005), Coordination of expectations in asset pricing experiments, Review of Financial Studies 18, 955-980.

All these experiments are ``learning to forecast experiments''. The 2000 and 2007 papers deal with cobweb experiments, while the 2005 deal with asset pricing experiments. The 2000 study is the only one dealing with individual experiments, while the other two deal with group experiments, with each group consisting of 6 individuals.

The Data can be downloaded here as a csv file, which can be openned in Microft Excel. 

The detailed descrition of the data can be found here in a txt file. 

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