Heterogeneous sunspots solutions under learning and replicator dynamics
In a linear stochastic forward-looking univariate model with predetermined variables, we consider the possibility of heterogeneous equilibria with sunspots emerging endogenously through adaptive learning and replicator dynamics. In particular, we investigate equilibria where only a fraction of agents in the economy condition their forecasts on a sunspot, and equilibria where di¤erent groups of agents use di¤erent sunspots. We comclude that, although such heterogeneous equilibria exist and can be stable under adaptive learning, they do no survive under endogenous replicator dynamics. Moreover, we show that even homogeneous sunspot equilibria require some degree of coordinations among agents for them to emerge in an economy. We conclude that heterogeneous equilibria with sunspots are fragile under endogenous selection of predictors by agents, and that even the relevance of homogeneous sunspot equilibria is questioned once agents are allowed to doubt about the importance of sunspots in their forecasts.
|Date of creation:||2011|
|Contact details of provider:|| Postal: Manchester M13 9PL|
Phone: (0)161 275 4868
Fax: (0)161 275 4812
Web page: http://www.socialsciences.manchester.ac.uk/subjects/economics/our-research/centre-for-growth-and-business-cycle-research/
More information through EDIRC
References listed on IDEAS
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.:
- Guse, Eran A., 2010.
"Heterogeneous expectations, adaptive learning, and evolutionary dynamics,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 74(1-2), pages 42-57, May.
- Eran A. Guse, 2008. "Heterogeneous Expectations, Adaptive Learning, and Evolutionary Dynamics," Working Papers 09-01, Department of Economics, West Virginia University.
- Michele Berardi, 2008.
"Fundamentalists vs. chartists: learning and predictor choice dynamics,"
Centre for Growth and Business Cycle Research Discussion Paper Series
104, Economics, The Univeristy of Manchester.
- Berardi, Michele, 2011. "Fundamentalists vs. chartists: Learning and predictor choice dynamics," Journal of Economic Dynamics and Control, Elsevier, vol. 35(5), pages 776-792, May.
- Michele Berardi, 2011. "Fundamentalists vs. chartists: Learning and predictor choice dynamics," Post-Print hal-00796301, HAL.
- Berardi, Michele, 2009. "Heterogeneous expectations, sunspot equilibria and their fragility," Economics Letters, Elsevier, vol. 105(3), pages 276-279, December.
- Roger E. A. Farmer, 1999. "Macroeconomics of Self-fulfilling Prophecies, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262062038, September.
When requesting a correction, please mention this item's handle: RePEc:man:cgbcrp:160. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marianne Sensier)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.