Stability of Competitive Equilibria with Heterogeneous Beliefs and Learning

Carl Chiarella and Xuezhong (Tony) He ()

No 37, Research Paper Series from Quantitative Finance Research Centre, University of Technology, Sydney

Abstract: The paper studies a class of models in which agents' expectations influence the actual dynamics while the expectations themselves are the outcome of some learning processes. Situations of both homogeneous and heterogeneous beliefs are considered. In both cases agents update their expectations by general ah - and least-squares h-processes and the stability of the resulting dynamics in both cases is analysed. It is shown how the stability of the actual dynamics is affected by the heterogeneous expectations and different least-squares h-processes.

Pages: 33 pages
Date: 2000-03-01
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Citations: View citations in EconPapers (10)

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