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Evolutionary learning and the stability of wage posting equilibria

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  • Robert Jump

    (Kingston University)

Abstract

This paper presents results on the stability of the wage dispersion model presented in Mortensen (2003). Specifically, four learning processes are tested on a single parameterisation of the underlying model, and the most successful is submitted to a sensitivity analysis. The results illustrate an important problem in evolutionary dynamics first highlighted in Nelson and Winter (1982) - that to play a role in equilibrium, a strategy must be consistent with a previous disequilibrium. The results are ambiguous concerning the applicability of the equilibrium method of Mortensen (2003), as some of the learning processes are stable, whilst others are extremely unstable and exhibit complex dynamics.

Suggested Citation

  • Robert Jump, 2016. "Evolutionary learning and the stability of wage posting equilibria," Journal of Evolutionary Economics, Springer, vol. 26(5), pages 1117-1135, December.
    • Handle: RePEc:spr:joevec:v:26:y:2016:i:5:d:10.1007_s00191-016-0476-2
    DOI: 10.1007/s00191-016-0476-2
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    References listed on IDEAS

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    More about this item

    Keywords

    Price dispersion; Search market equilibrium; Reinforcement learning;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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