Replicator Dynamics in a Cobweb Model with Rationally Heterogeneous Expectations
نویسندگان
چکیده
This paper extends the Adaptively Rational Equilibrium Dynamics (ARED) of (Brock and Hommes 1997) by introducing a generalized version of the replicator dynamic of (Sethi and Franke 1995). The Replicator Equilibrium Dynamics (RED) couples the price dynamics of a cobweb model with predictor selection governed by an evolutionary replicator dynamic. We show that the RED supports the main conclusion of Sethi and Franke that costly rational beliefs persist, though unlike Sethi and Franke, these results obtain in the deterministic case. Further, we find numerical evidence that complex dynamics exist similar to (Brock and Hommes 1997) even though no weight is placed on strictly dominated predictors in an RED steady state.
منابع مشابه
Pii: S0165-1889(01)00027-6
This paper gives local stability conditions for convergence of the price dynamics in a cobweb model with rationally heterogeneous expectations, generalizing the example of Brock and Hommes (1997). When agents choose between rational, naive, and adaptive beliefs, the steady state may be locally asymptotically stable if the adaptive predictor places enough weight on past prices and is costless. I...
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