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Heterogeneous beliefs and learning in forward looking economic models

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  • Emilio Barucci

    ()
    (Dipartimento di Statistica e Matematica Applicata all'Economia, Universit, degli studi di Pisa, Via Cosimo Ridolfi, 10, I-56124 Pisa, Italy)

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    Abstract

    We study a class of forward looking economic models with heterogeneous agents in a bounded rationality setting. The agents employ the same recursive learning rule to update beliefs but are characterized by different memory parameters. The peculiarity of the learning mechanism is that the learning rate is not vanishing in the limit. Differently from what is obtained in the case of a vanishing learning step, i.e., the stability conditions in the heterogeneous agents case are those of the representative agent model, we show that heterogeneity matters for the expectational stability of a stationary perfect foresight equilibrium and that the stability parameter restrictions with heterogeneous agents are stronger than in the case of homogeneous agents.

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    Bibliographic Info

    Article provided by Springer in its journal Journal of Evolutionary Economics.

    Volume (Year): 9 (1999)
    Issue (Month): 4 ()
    Pages: 453-464

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    Handle: RePEc:spr:joevec:v:9:y:1999:i:4:p:453-464

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    Web page: http://link.springer.de/link/service/journals/00191/index.htm

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    Related research

    Keywords: Forward looking models - Heterogeneous agents - Bounded rationality learning;

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    Cited by:
    1. Neugart, Michael & Tuinstra, Jan, 2001. "Endogenous fluctuations in the demand for education," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 01-209, Social Science Research Center Berlin (WZB).
    2. Orlando Gomes, . "Volatility, Heterogeneous Agents and Chaos," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV.
    3. Orlando Gomes, 2007. "The Dynamics of Growth and Migrations with Congestion Externalities," Economics Bulletin, AccessEcon, vol. 15(1), pages 1-8.
    4. Orlando Gomes, 2008. "Decentralized Allocation of Human Capital and Nonlinear Growth," Computational Economics, Society for Computational Economics, vol. 31(1), pages 45-75, February.
    5. Chryssi Giannitsarou, 2003. "Heterogeneous Learning," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(4), pages 885-906, October.
    6. Geoffrey Hodgson & Kainan Huang, 2012. "Evolutionary game theory and evolutionary economics: are they different species?," Journal of Evolutionary Economics, Springer, vol. 22(2), pages 345-366, April.
    7. repec:ebl:ecbull:v:15:y:2007:i:1:p:1-8 is not listed on IDEAS
    8. Honkapohja, Seppo & Mitra, Kaushik, 2002. "Learning stability in economics with heterogeneous agents," Working Paper Series 0120, European Central Bank.
    9. Orlando Gomes, 2012. "Attentiveness cycles: Synchronized behavior and aggregate fluctuations," Revista Brasileira de Economia, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 66(3), pages 271-288, October.
    10. Orlando Gomes, 2006. "Heterogeneous Researchers in a Two-Sector Representative Consumer Economy," Revista Brasileira de Economia, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 60(2), pages 113-132, November.

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