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Replicator Dynamic Learning in Muth's Model of Price Movements

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Author Info

  • Joel Carton

    (Department of Economics, Florida International University)

  • Eran A. Guse

    (Department of Economics, West Virginia University)

Abstract

We investigate the stability properties of Muth's model of price movements when agents choose a production level using replicator dynamic learning. It turns out that when there is a discrete set of possible production levels, possible stable states and stability conditions differ between adaptive learning and replicator dynamic learning. Furthermore, we show that the stability disparities between the two types of learning are due to the way asymptotic stability is defined under the replicator dynamics.

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File URL: http://www.be.wvu.edu/phd_economics/pdf/10-18.pdf
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Bibliographic Info

Paper provided by Department of Economics, West Virginia University in its series Working Papers with number 10-18.

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Length: 25 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:wvu:wpaper:10-18

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Web page: http://www.be.wvu.edu/phd_economics/
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Keywords: Asymptotic stability; replicator dynamics; cobweb model; E-stability; Nash equilibria.;

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  1. Guse, Eran A., 2010. "Heterogeneous expectations, adaptive learning, and evolutionary dynamics," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 74(1-2), pages 42-57, May.
  2. DeCanio, Stephen J, 1979. "Rational Expectations and Learning from Experience," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 93(1), pages 47-57, February.
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  4. Sethi, Rajiv & Franke, Reiner, 1995. "Behavioural Heterogeneity under Evolutionary Pressure: Macroeconomic Implications of Costly Optimisation," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 105(430), pages 583-600, May.
  5. Seppo Honkapohja & Kaushik Mitra, . "Learning with Bounded Memory in Stochastic Models," Discussion Papers, Department of Economics, University of York 00/42, Department of Economics, University of York.
  6. Fourgeaud, Claude & Gourieroux, Christian & Pradel, Jacqueline, 1986. "Learning Procedures and Convergence to Rationality," Econometrica, Econometric Society, Econometric Society, vol. 54(4), pages 845-68, July.
  7. Branch, William A. & McGough, Bruce, 2008. "Replicator dynamics in a Cobweb model with rationally heterogeneous expectations," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 65(2), pages 224-244, February.
  8. Evans, G.W. & Guesnerie, R., 1992. "Rationalizability, Strong Rationality and Expectational Stability," DELTA Working Papers, DELTA (Ecole normale supérieure) 92-03, DELTA (Ecole normale supérieure).
  9. Evans, George W. & Honkapohja, Seppo & Honkapohja, Seppo, 1994. "Learning, convergence, and stability with multiple rational expectations equilibria," European Economic Review, Elsevier, Elsevier, vol. 38(5), pages 1071-1098, May.
  10. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262731215, December.
  11. Drew Fudenberg & David K. Levine, 1996. "The Theory of Learning in Games," Levine's Working Paper Archive 624, David K. Levine.
  12. Arifovic, Jasmina, 1994. "Genetic algorithm learning and the cobweb model," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 18(1), pages 3-28, January.
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Cited by:
  1. Berardi, Michele, 2012. "Strategic interactions, incomplete information and learning," MPRA Paper 38651, University Library of Munich, Germany.

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