Stability and Cycles in a Cobweb Model with Heterogeneous Expectations
We investigate the dynamics of a cobweb model with heterogeneous beliefs, generalizing the example of Brock and Hommes (1997). We examine situations where the agents form expectations by using either rational expectations, or a type 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 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.
|Date of creation:||15 Jan 2007|
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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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