Stability And Cycles In A Cobweb Model With Heterogeneous Expectations
We investigate the dynamics of a cobweb model with heterogeneous beliefs, generalising the example of Brock and Hommes (1997). We examine situations where the agents form expectations by using either perfect foresight, or a form of adaptive expectations with limited memory defined from the last two prices. We specify conditions that generate cycles. These conditions depend on a set of factors that includes the proportion of rational agents, the intensity of switching between beliefs, and the adaption parameter. We show that both Flip bifurcation and Neimark-Sacker bifurcation can occur as primary bifurcation when the steady state is unstable.
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Volume (Year): 9 (2005)
Issue (Month): 05 (November)
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- repec:cup:macdyn:v:4:y:2000:i:1:p:108-38 is not listed on IDEAS
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"A Rational Route to Randomness,"
9530r, Wisconsin Madison - Social Systems.
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"Rational Routes to Randomness,"
95-03-029, Santa Fe Institute.
- Hommes, Cars H., 1998. "On the consistency of backward-looking expectations: The case of the cobweb," Journal of Economic Behavior & Organization, Elsevier, vol. 33(3-4), pages 333-362, January.
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