Cyber Physical Networked Markets and Misinformation Evaluation via Distributed Kalman Filter

Abstract

We study a networked market from a cyber physical system perspective. In the physical system we assume that the price dynamics of a good are being affected by the network structure of its supply and demand and from its respective substitute and complementary goods. In the cyber system we treat the agents (producers and consumers) as sensors of the actual prices and we use a hypergraph where each hyperedge depicts a group of agents that have the same views regarding the trajectories of the prices according to their socioeconomic interactions. For the price estimation by the agents we use a distributed Kalman filter which converges asymptotically to the equilibrium point of the physical system where each group of agents has different convergence rate depending on the hyperedge that they belong. The proposed algorithm can be viewed as a measure of how misinformation and prejudices delay groups of people from realizing the actual market prices by utilizing the convergence rates of the distributed Kalman Filter algorithm for the respective hyperedges.

Keywords: Networked Markets, Economic Cybernetics, Distributed Kalman Filter, Microeconometrics

JEL Classification: C32, D47, D85