Economics at your fingertips  

Sentiment-driven limit cycles and chaos

Orlando Gomes () and J. C. Sprott ()
Additional contact information
J. C. Sprott: University of Wisconsin-Madison

Journal of Evolutionary Economics, 2017, vol. 27, issue 4, 729-760

Abstract: Abstract A recent strand of macroeconomic literature has placed sentiment fluctuations at the forefront of the academic debate about the foundations of business cycles. Waves of optimism and pessimism influence the decisions of investors and consumers, and they might therefore be interpreted as a driving force for the performance of the economy in the short term. In this context, two questions regarding the formation and evolution of psychological moods in an economic setting gain relevance: First, how can we model the process of transmission of sentiments across economic agents? Second, is this process capable of generating endogenous and persistent fluctuations? This paper answers these two questions by proposing a simple and intuitive continuous-time dynamic sentiment spreading model based on the rumor propagation literature. As agents contact with one another, endogenous fluctuations are likely to emerge, with trajectories of sentiment shares potentially exhibiting periodic cycles and chaotic behavior.

Keywords: Sentiments; Waves of optimism and pessimism; Endogenous fluctuations; Limit cycles; Chaos (search for similar items in EconPapers)
JEL-codes: E32 E03 C62 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

Access Statistics for this article

Journal of Evolutionary Economics is currently edited by Uwe Cantner, Elias Dinopoulos, Horst Hanusch and Luigi Orsenigo

More articles in Journal of Evolutionary Economics from Springer
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2019-12-20
Handle: RePEc:spr:joevec:v:27:y:2017:i:4:d:10.1007_s00191-017-0497-5