A dynamic duopoly model with bounded rationality based on constant conjectural variation

Weisheng Yu and Yu Yu

Economic Modelling, 2014, vol. 37, issue C, 103-112

Abstract: In this paper, we construct dynamic models on the basis of constant conjectural variation. Duopolists with dynamic adjustment behavior of bounded rationality have been considered. Numerical simulation is used to illustrate the complexion of models. The existence of equilibrium points and their stability in this nonlinear system are discussed. We study two special cases of symmetry model and Bertrand model with conjectural variation. When the speed of output adjustment changes, a series of complex phenomena including bifurcation, chaos and strange attractors can be observed in our models. We also analyzed the importance of the initial conditions to the system that a tiny variation of the initial value will cause dramatic fluctuations in output.

Keywords: Conjectural variation; Bounded rationality; Bifurcation; Chaos (search for similar items in EconPapers)
JEL-codes: C73 D21 D43 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:37:y:2014:i:c:p:103-112

DOI: 10.1016/j.econmod.2013.10.034

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