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on Evolutionary Economics |
| By: | Jim Granato; Eran Guse; M.C. Sunny Wong |
| Abstract: | The assumption of perfectly rational representative agents is commonly questioned. This paper explores the equilibrium properties of boundedly rational heterogeneous agents. We combine an adaptive learning process in a modified cobweb model within a Stackleberg framework. We assume that there is an asymmetric information diffusion process from leading to following firms. In contrast to a simple cobweb model which has a unique REE, our model may produce multiple restricted perceptions equilibria (RPE). However, a unique and learnable RPE, under certain conditions, can exist in our model. In addition, the following firms’ forecasts can confound the leading firms’ forecasts - when the following firms misinterpret information coming from the leading firms. We refer this situation to the boomerang effect. We also find that the leading firms’ mean squared forecast error can be even larger than that of following firms if the proportion of following firms is sufficiently large in the market. |
| Keywords: | Adaptive Learning; Expectational Stability; Information Diffusion, Cobweb Model, Heterogeneous Expectations |
| JEL: | C62 D84 E37 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0605&r=evo |
| By: | Juana Santamaria-Garcia (Universidad de Alicante) |
| Abstract: | Equilibrium selection in the Nash demand game is investigated in a learning context with persistent randomness. I adopt a matching framework similar to Kandori, Mailath and Rob (1993) and assume that individuals belong to populations of different sizes. Despite the myopic behavior of individuals, the selected division of the surplus that will be observed most of the time coincides with the Nash bargaining solution. Depending on the matching scenario, either the symmetric or the generalized Nash bargaining solution is selected. In the latter case, the power is larger for the short-side of the market. |
| Keywords: | bargaining, best response, convention, learning, stochastic stability. |
| JEL: | C63 C78 D83 |
| Date: | 2004–09 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2004-34&r=evo |
| By: | José A. García Martínez (Universidad de Alicante) |
| Abstract: | In this paper we have introduced and parameterized the concept of ?group cohesion? in a model of local interaction with a population divided into groups. This allows us to control the level of ?isolation? of these groups: We thus analyze if the degree of group cohesion is relevant to achieve an efficient behaviour and which level would be the best one for this purpose. We are interested in situations where there is a trade off between efficiency and individual incentives. This trade off is stronger when the efficient strategy or norm is strictly dominated, as in the Prisoner?s Dilemma or in some cases of Altruism. In our model we have considered that agents could choose to be Altruist of Egoist, in fact, they behave as in Eshel, Samuelson and Shaked (1998) model. |
| Keywords: | Group Cohesion, Cooperation, Local Interaction, Altruism, Group selection. |
| JEL: | C70 C78 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2004-44&r=evo |