Evolutionary foundations of equilibria in irrational markets

by Guo Ying Luo

One of the core building blocks of traditional economic theory is the concept of equilibrium, a state of the world in which economic forces are balanced and in the absence of external influences the values of economic variables remain static. Many traditional equilibrium models, or equilibria, are established based on the rational behavior of individuals within financial markets, such as traders, market analysts, and investing firms, and their ability to maximize profits, no matter the cost. Yet what happens when these market participants behave in an irrational manner, and how does this impac

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Year of publication:	2012
Authors:	Luo, Guo Ying
Publisher:	New York, NY : Springer Science+Business Media, LLC
Subject:	Gleichgewichtstheorie \| Equilibrium theory \| Evolutionsökonomik \| Evolutionary economics \| Verhaltensökonomik \| Behavioral economics \| Theorie \| Theory \| Terminmarkt \| Auktionsbörse \| Irrationalität

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Extent:	Online-Ressource v.: digital
Series:	Studies in Economic Theory ; 28
Type of publication:	Book / Working Paper
Language:	English
Notes:	Includes bibliographical references Evolutionary Foundations of Equilibria in Irrational Markets; Acknowledgements; Contents; Chapter 1 Introduction; References; Chapter 2 Evolution, Irrationality, and Perfectly Competitive Equilibrium; 2.1 Introduction; 2.2 The Model; 2.3 The Results; 2.4 Numerical Illustration; 2.5 Conclusions; Appendix; References; Chapter 3 Evolution, Irrationality, and Monopolistically Competitive Equilibrium; 3.1 Introduction; 3.2 The Model; 3.2.1 The Demand and Average Cost Functions; 3.2.2 The Dynamic Process of Monopolistic Competition; 3.3 The Results; 3.4 Numerical Illustration; 3.5 Conclusions Appendix AAppendix B; References; Chapter 4 Evolution and Informationally Efficient Equilibrium in a Commodity Futures Market; 4.1 Introduction; 4.2 The Model; 4.2.1 Speculators' Types; 4.2.2 Speculators in the Market Selection Process; 4.2.3 The Futures Market Equilibrium; 4.3 Convergence of Futures Market to Efficiency; 4.4 Conclusions; Appendix A; Appendix B; Appendix C; Appendix D; References; Chapter 5 Natural Selection, Random Shocks, and Market Efficiency in a Futures Market; 5.1 Introduction; 5.2 Commodity Futures Market; 5.3 Traders' Predetermined Behavior Rules 5.4 Numerical Examples and Results5.5 Conclusions; Appendix A; Appendix B; References; Chapter 6 Evolution, Noise Traders, and Market Efficiency in a One-Sided Auction Market; 6.1 Introduction; 6.2 The Model; 6.2.1 Traders' Prediction Errors; 6.2.2 Traders' Wealth Dynamics in the Market Process; 6.2.3 The Asset Market Equilibrium; 6.3 Convergence of the Asset Price to the Fundamental Value; 6.4 Conclusions; Appendix A; Appendix B; Appendix C; C.1 Failure of Convergence with Too Noisy Traders C.2 Convergence when the Probability of Predicting the Fundamental Value is Allowed to be Arbitrarily Close to 1C.3 Convergence when the Probability of Predicting the Fundamental Value is Constrained to be Lessthan a Number Below 1; References; Chapter 7 The Evolution of Money as a Medium of Exchange in a Primitive Economy; 7.1 Introduction; 7.2 Framework; 7.2.1 Physical Environment; 7.2.2 The Trading Sessions; 7.3 Evolution of Strategies; 7.3.1 Example 1: Random Sampling Amongthe Same Population; 7.3.2 The General Class of Dynamics; 7.3.3 Equilibria Selection 7.3.3.1 Unequal Storability Among Commodities7.3.3.2 Equal Storability Among Commodities; 7.4 Mutation; 7.4.1 The General Class of Dynamics; 7.4.2 Equilibria Selection with Mutation; 7.5 Conclusions; Appendix A; Appendix B; Appendix C; Appendix D; References; Chapter 8 Conclusions; Reference;
ISBN:	1-283-44359-7 ; 978-1-4614-0712-6 ; 978-1-283-44359-3 ; 1-283-43964-6 ; 978-1-4614-0711-9
Other identifiers:	10.1007/978-1-4614-0712-6 [DOI]
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10014275320