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Controlling noisy, stable and chaotic, economics

Author

Listed:
  • Ruedi Stoop

    () (Institute of Neuroinformatics, University/ETH Zurich and Univ. of Applied Technical Sciences of Northwestern Switzerland, Olten)

  • Albert Kern

    () (Institute of Neuroinformatics, University/ETH Zurich)

  • Clemens Wagner

    () (Department of Pharmacology, University of Bern)

Abstract

We investigate a simple nonlinear model of economics to which strong multiplicative noise is added, and find two distinct generic control regimes. In the regime of noisy behavior, the application of the control is able to reduce noise only if the underlying periodicity is correctly taken into account. In the chaotic regime, a shift of the optimal control point relative to the noise-free control point is observed, scaling linearly with the noise strength. The best control results emerge for unstable orbits of period-one, which suggests, that economic systems should preferably be controlled on these states.

Suggested Citation

  • Ruedi Stoop & Albert Kern & Clemens Wagner, "undated". "Controlling noisy, stable and chaotic, economics," Modeling, Computing, and Mastering Complexity 2003 18, Society for Computational Economics.
  • Handle: RePEc:sce:cplx03:18
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    File URL: http://zai.ini.unizh.ch/www_complexity2003/doc/Paper_Stoop.pdf
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    Keywords

    control; simple limiter; noise; chaos; nonlinear system;

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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