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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
File Function: First version, 2010
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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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Related research

Keywords: Asymptotic stability; replicator dynamics; cobweb model; E-stability; Nash equilibria.;

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  1. Arifovic, Jasmina, 1994. "Genetic algorithm learning and the cobweb model," Journal of Economic Dynamics and Control, Elsevier, vol. 18(1), pages 3-28, January.
  2. DeCanio, Stephen J, 1979. "Rational Expectations and Learning from Experience," The Quarterly Journal of Economics, MIT Press, vol. 93(1), pages 47-57, February.
  3. Evans, George W. & Honkapohja, Seppo & Honkapohja, Seppo, 1994. "Learning, convergence, and stability with multiple rational expectations equilibria," European Economic Review, Elsevier, vol. 38(5), pages 1071-1098, May.
  4. Seppo Honkapohja & Kaushik Mitra, . "Learning with Bounded Memory in Stochastic Models," Discussion Papers 00/42, Department of Economics, University of York.
  5. Eran A. Guse, 2008. "Heterogeneous Expectations, Adaptive Learning, and Evolutionary Dynamics," Working Papers 09-01, Department of Economics, West Virginia University.
  6. Evans, G.W. & Guesnerie, R., 1992. "Rationalizability, Strong Rationality and Expectational Stability," DELTA Working Papers 92-03, DELTA (Ecole normale supérieure).
  7. Drew Fudenberg & David K. Levine, 1998. "The Theory of Learning in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061945, December.
  8. Branch, William A. & McGough, Bruce, 2008. "Replicator dynamics in a Cobweb model with rationally heterogeneous expectations," Journal of Economic Behavior & Organization, Elsevier, vol. 65(2), pages 224-244, February.
  9. Marcet, Albert & Sargent, Thomas J., 1989. "Convergence of least squares learning mechanisms in self-referential linear stochastic models," Journal of Economic Theory, Elsevier, vol. 48(2), pages 337-368, August.
  10. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215, December.
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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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