  In this paper, we develop an agent-based version of the Diamond search
equilibrium model - also called Coconut Model. In this model, agents are faced
with production decisions that have to be evaluated based on their expectations
about the future utility of the produced entity which in turn depends on the
global production level via a trading mechanism. While the original dynamical
systems formulation assumes an infinite number of homogeneously adapting agents
obeying strong rationality conditions, the agent-based setting allows to
discuss the effects of heterogeneous and adaptive expectations and enables the
analysis of non-equilibrium trajectories. Starting from a baseline
implementation that matches the asymptotic behavior of the original model, we
show how agent heterogeneity can be accounted for in the aggregate dynamical
equations. We then show that when agents adapt their strategies by a simple
temporal difference learning scheme, the system converges to one of the fixed
points of the original system. Systematic simulations reveal that this is the
only stable equilibrium solution.
