Heterogeneous beliefs and the non-linear cobweb model.
| Authors | |
|---|---|
| Publication date | 1997 |
| Series | Tinbergen Institute Discussion Papers, TI 1997-115/1 |
| Publisher | Amserdam / Rotterdam: Tinbergen Institute |
| Organisations |
|
| Abstract |
See the publication in the Journal of Economic Dynamics and Control (2000), 34(2), 761-798. This paper investigates price fluctuations in an evolutionary cobweb model with heterogeneous beliefs. Agents choose between free naive expectations and costly rational expectations, and update their beliefs according to a "fitness" measure such as past realized net profits. For non-linear, monotonic demand and supply curves, it is shown that the evolutionary dynamics exhibits bifurcation routes to strange attractors when the intensity of choice to switch prediction strategies increases. |
| Document type | Working paper |
| Language | English |
| Permalink to this page | |
