Is more memory in evolutionary selection (de)stabilizing?
| Authors |
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| Publication date | 2012 |
| Journal | Macroeconomic Dynamics |
| Volume | Issue number | 16 | 3 |
| Pages (from-to) | 335-357 |
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| Abstract | We investigate the effects of memory on the stability of evolutionary selection dynamics based on a multinomial logit model in a simple asset pricing model with heterogeneous beliefs. Whether memory is stabilizing or destabilizing depends in general on three key factors: (1) whether or not the weights on past observations are normalized; (2) the ecology or composition of forecasting rules, in particular the average trend extrapolation factor and the spread or diversity in biased forecasts; and (3) whether or not costs for information gathering of economic fundamentals have to be incurred. |
| Document type | Article |
| Language | English |
| Published at |
https://doi.org/10.1017/S136510051000060X
(Final published version)
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