| Authors |
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| Publication date |
2012
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| Journal |
Macroeconomic Dynamics
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| Volume | Issue number |
16 | 3
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| Pages (from-to) |
335-357
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| Organisations |
-
Faculty of Economics and Business (FEB) - Amsterdam School of Economics Research Institute (ASE-RI)
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| Abstract |
We investigate the effects of memory on the stability of evolutionary selection dynamics based on a multinomial logit model in a simple asset pricing model with heterogeneous beliefs. Whether memory is stabilizing or destabilizing depends in general on three key factors: (1) whether or not the weights on past observations are normalized; (2) the ecology or composition of forecasting rules, in particular the average trend extrapolation factor and the spread or diversity in biased forecasts; and (3) whether or not costs for information gathering of economic fundamentals have to be incurred.
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| Document type |
Article
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| Language |
English
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| Published at |
https://doi.org/10.1017/S136510051000060X
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