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Journal of Evolutionary Economics

, Volume 12, Issue 5, pp 525–538 | Cite as

On bubbling dynamics generated by a stochastic model of herd behavior

  • Loris Gaio
  • Yuri M. Kaniovski
  • Enrico Zaninotto
Original paper

Abstract.

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 learning 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.

Key words:Herd behavior – Markov chain – Bubbling dynamics 
JEL Classification:C72, C73, D83 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2002

Authors and Affiliations

  • Loris Gaio
    • 1
  • Yuri M. Kaniovski
    • 2
  • Enrico Zaninotto
    • 1
  1. 1.Dipartimento di Informatica e Studi Aziendali, Università di Trento, Via Inama 4, 38100 Trento, Italy (e-mail: {lgaio,ezani}@cs.unitn.it) IT
  2. 2. School of Economics, Free University of Bozen-Bolzano, Via Sernesi 1, 39100 Bolzano, Italy (e-mail: Yuriy.Kaniovskyi@unibz.it) IT

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