According to the existing empirical literature, the price and the exchanged quantity volatility observed in real-world markets may be explained in terms of the endogenous fluctuations generated by the presence of nonlinearities. We then replace with a sigmoid adaptive best response mechanism,...

We develop a nonlinear duopoly model in which the heuristic expectation formation and learning behavior of two boundedly rational firms may engender complex dynamics. Most importantly, we assume that the firms employ different forecasting models to predict the behavior of their opponent....