Consistent Expectations Equilibria and Complex Dynamics in Renewable Resource Markets

Cars Hommes and J. Barkley Rosser

No 01-013/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Price fluctuations under adaptive learning in renewable resourcemarkets such as fisheries are examined. Optimal fisherymanagement with logistic fish pOpUlation growth implies a backward-bending, discounted supply curve for bioeconomicequilibrium sustained yield. Higher discount rates bend supplybackwards more to generate multiple steady state rationalexpectations equilibria. Under bounded rationality adaptive learningof a linear forecasting rule generates steady state, 2-cycle as weIl as chaotic consistent expectations equilibria (CEE),which are self-fulfilling in sample average andautocorrelations. The possibility of "learning to believe in chaos"is robust and even enhanced by dynamic noise.

Date: 2001-02-06
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Citations: View citations in EconPapers (35)

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Related works:
Journal Article: CONSISTENT EXPECTATIONS EQUILIBRIA AND COMPLEX DYNAMICS IN RENEWABLE RESOURCE MARKETS (2001)
Working Paper: Consistent Expectations Equilibria and Complex Dynamics in Renewable Resource Markets (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20010013

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