Complex dynamics in a nonlinear duopoly model with heuristic expectation formation and learning behavior

Arbeitspapier

We develop a nonlinear duopoly model in which the heuristic expectation formation and learning behavior of two boundedly rational firms may engender complex dynamics. Most importantly, we assume that the firms employ different forecasting models to predict the behavior of their opponent. Moreover, the firms learn by leaning more strongly on forecasting models that yield more precise predictions. An eight-dimensional nonlinear map drives the dynamics of our approach. We analytically derive the conditions under which its unique steady state is locally stable and numerically study its out-of-equilibrium behavior. In doing so, we detect multiple scenarios with coexisting attractors at which the firms' behavior yields distinctively different market outcomes.

Angaben zum Objekt

• ISBN: 978-3-949224-08-9
• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: BERG Working Paper Series ; No. 187

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Stochastic and Dynamic Games; Evolutionary Games; Repeated Games ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Monopoly; Monopolization Strategies
• Thema: Duopoly model ; heuristic expectation formation ; learning behavior ; nonlinear dynamics ; stability and bifurcation analysis ; coexisting attractors

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Mignot, Sarah ; Tramontana, Fabio ; Westerhoff, Frank H.
• Ereignis: Veröffentlichung
• (wer): Bamberg University, Bamberg Economic Research Group (BERG)
• (wo): Bamberg
• (wann): 2023

Weitere Informationen

• Handle: http://hdl.handle.net/10419/273389
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ