The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Stochastic Adaptive Dynamics

  • H. Peyton Young
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_1990

Abstract

Economic systems often involve large numbers of agents whose behaviour, and patterns of interaction, have stochastic components. The dynamic properties of such systems can be analysed using stochastic dynamical systems theory. A key feature of these processes is that their long-run behaviour often differs substantially from the behaviour of the deterministic process obtained by taking expectations of the random variables. Furthermore, unlike the deterministic dynamics, the theory yields sharp predictions about the probability of being in different equilibria independently of the initial conditions.

JEL Classifications

C7 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • H. Peyton Young
    • 1
  1. 1.