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Learning From The Expectations Of Others Author info | Abstract | Publisher info | Download info | Related research | Statistics GRANATO, JIM
GUSE, ERAN A.
WONG, M. C. SUNNY
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This paper explores the equilibrium properties of boundedly rational heterogeneous agents under adaptive learning. In a modified cobweb model with a Stackelberg framework, there is an asymmetric information diffusion process from leading to following firms. It turns out that the conditions for at least one learnable equilibrium are similar to those under homogeneous expectations. However, the introduction of information diffusion leads to the possibility of multiple equilibria and can expand the parameter space of potential learnable equilibria. In addition, the inability to correctly interpret expectations will cause a on the forecasts and forecast efficiency of the leading firms. The leading firms' mean square forecast error can be larger than that of following firms if the proportion of following firms is sufficiently large.
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Article provided by Cambridge University Press in its journal Macroeconomic Dynamics .
Volume (Year): 12 (2008)
Issue (Month): 03 (June)
Pages: 345-377
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Handle: RePEc:cup:macdyn:v:12:y:2008:i:03:p:345-377_07Contact details of provider: Postal: The Edinburgh Building, Shaftesbury Road, Cambridge CB2 2RU UK Fax: +44 (0)1223 325150 Email: Web page: http://journals.cambridge.org/jid_MDY
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Paper Jim Granato & Eran Guse & Sunny Wong, 2006.
"Learning From the Expectations of Others ,"
Computing in Economics and Finance 2006
449, Society for Computational Economics.
Granato, J. & Guse, E. & Sunny Wong, M.C., 2006.
"Learning from the Expectations of Others ,"
Cambridge Working Papers in Economics
0605, Faculty of Economics, University of Cambridge.
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