This paper develops an agent-based model(ABM) to replicate financial instability, such as bubbles and crashes in asset markets, by introducing a simple idea of ‘heterogeneous expectation’ by which agents have different expectations about a ‘tipping point’ where they expect the price to...

This paper develops an agent-based model(ABM) to replicate financial instability, such as bubbles and crashes in asset markets, by introducing a simple idea of 'heterogeneous expectation' by which agents have different expectations about a 'tipping point' where they expect the price to stop...

Background: The traditional economic models are increasingly perceived as weak in explaining the bubbles and crashes in financial markets and the associated crisis. Thus, especially after the global financial crisis in 2008, agent-based model (ABM) is getting an attention as an alternative...