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Title: Stability and cycles in a cobweb model with heterogeneous expectations
Authors: Lasselle, Laurence
Svizzero, S
Tisdell, C
Keywords: Bounded rationality
Cobweb model
Flip bifurcation
Neimark-Sacker bifurcation
HB Economic Theory
Issue Date: Nov-2005
Citation: Lasselle , L , Svizzero , S & Tisdell , C 2005 , ' Stability and cycles in a cobweb model with heterogeneous expectations ' Macroeconomic Dynamics , vol 9 , no. 5 , pp. 630-650 . , 10.1017/S1365100505050017
Abstract: We investigate the dynamics of a cobweb model with heterogeneous beliefs, generalizing the example of Brock and Hommes (1997). We examine situations where the agents form expectations by using either rational expectations, or a type of adaptive expectations with limited memory defined from the last two prices. We specify conditions that generate cycles. These conditions depend on a set of factors that includes the intensity of switching between beliefs and the adaption parameter. We show that both Flip bifurcation and Neimark-Sacker bifurcation can occur as primary bifurcation when the steady state is unstable.
Version: Publisher PDF
Status: Peer reviewed
ISSN: 1365-1005
Type: Journal article
Rights: (c)2005 Cambridge University Press
Appears in Collections:Centre for Responsible Banking and Finance Research
University of St Andrews Research
Economics & Finance Research

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