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Evolutionary Competition Between Prediction Rules and the Emergence of Business Cycles within Metzler’s Inventory Model
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BibTeX
@MISC{Wegener_evolutionarycompetition,
author = {Michael Wegener and Frank Westerhoff},
title = {Evolutionary Competition Between Prediction Rules and the Emergence of Business Cycles within Metzler’s Inventory Model},
year = {}
}
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Abstract
Abstract. We revise Metzler’s well-known inventory model by developing a frame-work in which producers can either apply a simple but cheap extrapolative or a more sophisticated but expensive regressive forecasting rule to predict future sales. Pro-ducers are boundedly rational in the sense that they tend to select forecasting rules with a high evolutionary fitness. Using a mixture of analytical and numerical tools, we attempt to describe the characteristics of our model’s dynamical system. Our results suggest that the evolutionary competition between heterogeneous predictors may lead to irregular fluctuations in economic activity.
Keyphrases
business cycle evolutionary competition prediction rule metzler inventory model evolutionary competition cheap extrapolative well-known inventory model future sale high evolutionary fitness dynamical system forecasting rule irregular fluctuation heterogeneous predictor numerical tool expensive regressive forecasting rule economic activity
