Heterogeneous beliefs and learning in forward looking economic models*

Emilio Barucci ()
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Emilio Barucci: Dipartimento di Statistica e Matematica Applicata all'Economia, Universit, degli studi di Pisa, Via Cosimo Ridolfi, 10, I-56124 Pisa, Italy

Journal of Evolutionary Economics, 1999, vol. 9, issue 4, 453-464

Abstract: We study a class of forward looking economic models with heterogeneous agents in a bounded rationality setting. The agents employ the same recursive learning rule to update beliefs but are characterized by different memory parameters. The peculiarity of the learning mechanism is that the learning rate is not vanishing in the limit. Differently from what is obtained in the case of a vanishing learning step, i.e., the stability conditions in the heterogeneous agents case are those of the representative agent model, we show that heterogeneity matters for the expectational stability of a stationary perfect foresight equilibrium and that the stability parameter restrictions with heterogeneous agents are stronger than in the case of homogeneous agents.

Keywords: Forward; looking; models; -; Heterogeneous; agents; -; Bounded; rationality; learning (search for similar items in EconPapers)
JEL-codes: C62 D83 D84 E40 (search for similar items in EconPapers)
Date: 1999-12-01
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Citations: View citations in EconPapers (20)

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