On bubbling dynamics generated by a stochastic model of herd behavior

Gaio, Loris and Kaniovski, Yuri M. and Zaninotto, Enrico (1999) On bubbling dynamics generated by a stochastic model of herd behavior. In «ROCK Working Papers», Università degli Studi di Trento. (Unpublished)

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    This paper suggests a class of stochastic collective learning processes exhibiting very irregular behavior. In particular, there are multimodal long run distributions. Some of these modes may vanish as the population size increases. This may be thought of as "bubbles" persistent for a finite range of population sizes but disappearing in the limit. The limit distribution proves to be a discontinuous function of parameters determining the learn- ing process. This gives rise to another type of "bubbles": limit outcomes corresponding to small perturbations of parameters are different. Since an agent's decision rule involves imitation of the majority choice in a random sample of other members of the population, the resulting collective dynamics exhibit "herding" or "epidemic" features.

    Item Type: Article in journal
    Department or Research center: Computer and management sciences
    Subjects: Q Science > QA Mathematics > QA269 Game theory
    H Social Sciences > HB Economic Theory
    Uncontrolled Keywords: Increasing returns - birth and death Markov chain - bubbles
    Repository staff approval on: 13 Jan 2011

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