Instability in the cobweb model under the BNN dynamic

The cobweb model where firms choose between rational and naive forecasting strategies has a 2-cycle when the slope of supply is greater than the slope of demand for a number of different dynamics describing the evolution of strategy choices. This paper proves that the 2-cycle is exponentially unstable under the learning dynamic of Brown et al. (1950). Issues arising in the analysis of piecewise smooth discrete time maps are discussed.

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Year of publication:	2010
Authors:	Waters, George A.
Published in:	Journal of Mathematical Economics. - Elsevier, ISSN 0304-4068. - Vol. 46.2010, 2, p. 230-237
Publisher:	Elsevier
Subject:	Chaos Cobweb model Learning BNN

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008499571