Instability in the cobweb model under the BNN dynamic
AbstractThe cobweb model where firms choose between rational and naive forecasting strategies has a 2-cycle when the slope of supply is greater than the slope of demand for a number of different dynamics describing the evolution of strategy choices. This paper proves that the 2-cycle is exponentially unstable under the learning dynamic of Brown et al. (1950). Issues arising in the analysis of piecewise smooth discrete time maps are discussed.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Mathematical Economics.
Volume (Year): 46 (2010)
Issue (Month): 2 (March)
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Web page: http://www.elsevier.com/locate/jmateco
Chaos Cobweb model Learning BNN;
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