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On bubbling dynamics generated by a stochastic model of herd behavior

Author

Listed:
  • Enrico Zaninotto

    (Dipartimento di Informatica e Studi Aziendali, Universit, di Trento, Via Inama 4, 38100 Trento, Italy)

  • Yuri M. Kaniovski

    (School of Economics, Free University of Bozen-Bolzano, Via Sernesi 1, 39100 Bolzano, Italy)

  • Loris Gaio

    (Dipartimento di Informatica e Studi Aziendali, Universit, di Trento, Via Inama 4, 38100 Trento, Italy)

Abstract

This paper suggests a class of stochastic collective learning processes exhibiting very irregular behavior. In particular, there are multimodal long run distributions. Some of these modes may vanish as the population size increases. This may be thought of as "bubbles" persistent for a finite range of population sizes but disappearing in the limit. The limit distribution proves to be a discontinuous function of parameters determining the learning process. This gives rise to another type of "bubbles": limit outcomes corresponding to small perturbations of parameters are different. Since an agent's decision rule involves imitation of the majority choice in a random sample of other members of the population, the resulting collective dynamics exhibit "herding" or "epidemic" features.

Suggested Citation

  • Enrico Zaninotto & Yuri M. Kaniovski & Loris Gaio, 2002. "On bubbling dynamics generated by a stochastic model of herd behavior," Journal of Evolutionary Economics, Springer, vol. 12(5), pages 525-538.
    • Handle: RePEc:spr:joevec:v:12:y:2002:i:5:p:525-538
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    Cited by:

    1. Mark Bowden & Stuart McDonald, 2008. "The Impact of Interaction and Social Learning on Aggregate Expectations," Computational Economics, Springer;Society for Computational Economics, vol. 31(3), pages 289-306, April.

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