Instability in the cobweb model under the BNN dynamic |
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Authors: | George A Waters |
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Institution: | Department of Economics, Campus Box 4200, Illinois State University, Normal, IL 61761-4200 |
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Abstract: | 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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Keywords: | C62 C73 D83 D84 |
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