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Adaptive Learning and Information Diffusion

Author

Listed:
  • Eran Guse

    (Department of Economics, West Virginia University)

  • Sunny M.C. Wong

    (Department of Economics, University of San Francisco)

Abstract

This paper introduces a two-stage interactive cobweb model with information diffusion. The additional stage of information diffusion leads to a possibility of up to five equilibria. Stability properties under learning remain similar to those under a model with one-way information diffusion, but this modified assumption improves forecast efficiency for all firms involved.

Suggested Citation

  • Eran Guse & Sunny M.C. Wong, 2011. "Adaptive Learning and Information Diffusion," Working Papers 11-04, Department of Economics, West Virginia University.
  • Handle: RePEc:wvu:wpaper:11-04
    as

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    File URL: http://be.wvu.edu/phd_economics/pdf/11-04.pdf
    File Function: First version, 2011
    Download Restriction: no

    References listed on IDEAS

    as
    1. Granato, Jim & Guse, Eran A. & Wong, M. C. Sunny, 2008. "Learning From The Expectations Of Others," Macroeconomic Dynamics, Cambridge University Press, vol. 12(03), pages 345-377, June.
    2. Guse, Eran A., 2005. "Stability properties for learning with heterogeneous expectations and multiple equilibria," Journal of Economic Dynamics and Control, Elsevier, vol. 29(10), pages 1623-1642, October.
    3. Honkapohja, Seppo & Mitra, Kaushik, 2003. "Learning with bounded memory in stochastic models," Journal of Economic Dynamics and Control, Elsevier, vol. 27(8), pages 1437-1457, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Adaptive Learning; Expectational Stability; Information Diffusion; Cobweb Model; Heterogeneous Expectations;

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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