Dynamic Learning, Herding and Guru Effects in Networks
AbstractIt has been widely accepted that herding is the consequence of mimetic responses by agents interacting locally on a communication network. In extant models, this communication network linking agents, by and large, has been assumed to be fixed. In this paper we allow it to evolve endogenously by enabling agents to adaptively modify the weights of their links to their neighbours by reinforcing �good� advisors and breaking away from �bad� advisors with the latter being replaced randomly from the remaining agents. The resulting network not only allows for herding of agents, but crucially exhibits realistic properties of socio-economic networks that are otherwise difficult to replicate: high clustering, short average path length and a small number of highly connected agents, called "gurus". These properties are now well understood to characterize �small world networks� of Watts and Strogatz (1998).
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number 582.
Date of creation: 12 Oct 2004
Date of revision:
Postal: Discussion Papers Administrator, Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, U.K.
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-09-05 (All new papers)
- NEP-CBE-2004-09-05 (Cognitive & Behavioural Economics)
- NEP-EVO-2004-09-05 (Evolutionary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sheri M. Markose, 2005.
"Computability and Evolutionary Complexity: Markets as Complex Adaptive Systems (CAS),"
Royal Economic Society, vol. 115(504), pages F159-F192, 06.
- Sheri M. Markose, 2004. "Computability and Evolutionary Complexity: Markets As Complex Adaptive Systems (CAS)," Economics Discussion Papers 574, University of Essex, Department of Economics.
- Sheri M. Markose, 2001. "The New Evolutionary Computational Paradigm of Complex Adaptive Systems: Challenges and Prospects for Economics and Finance," Economics Discussion Papers 532, University of Essex, Department of Economics.
- Challet, Damien & Zhang, Yi-Cheng, 1998. "On the minority game: Analytical and numerical studies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 256(3), pages 514-532.
- Vriend, Nicolaas J, 1995. "Self-Organization of Markets: An Example of a Computational Approach," Computational Economics, Society for Computational Economics, vol. 8(3), pages 205-31, August.
- Sheri Markose & Simone Giansante & Mateusz Gatkowski & Ali Rais Shaghaghi, 2010.
"Too Interconnected To Fail: Financial Contagion and Systemic Risk in Network Model of CDS and Other Credit Enhancement Obligations of US Banks,"
Economics Discussion Papers
683, University of Essex, Department of Economics.
- Sheri Markose & Simone Giansante & Mateusz Gatkowski & Ali Rais Shaghaghi, 2010. "Too Interconnected To Fail: Financial Contagion and Systemic Risk In Network Model of CDS and Other Credit Enhancement Obligations of US Banks," Working Papers 033, COMISEF.
- Tedeschi, Gabriele & Iori, Giulia & Gallegati, Mauro, 2012.
"Herding effects in order driven markets: The rise and fall of gurus,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 81(1), pages 82-96.
- Iori, G. & Tedeschi, G., 2010. "Herding effects in order driven markets: The rise and fall of gurus," Working Papers 10/05, Department of Economics, City University London.
- Sami Al-Suwailem, 2012. "Complexity and Endogenous Instability," ASSRU Discussion Papers 1203, ASSRU - Algorithmic Social Science Research Unit.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Essex Economics Web Manager).
If references are entirely missing, you can add them using this form.