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Multiple equilibria and chaos in a discrete tâtonnement process

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  • Kaizoji, Taisei

Abstract

The purpose of this note is to demonstrate a sufficient condition for discrete tâtonnement process to lead to chaos in a general equilibrium model with multiple commodities. The result indicates that as the speed of price adjustment increases the discrete tâtonnement process is complex in a general equilibrium economy in which there are multiple equilibria.

Suggested Citation

  • Kaizoji, Taisei, 2010. "Multiple equilibria and chaos in a discrete tâtonnement process," MPRA Paper 24002, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:24002
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    References listed on IDEAS

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    1. Day, Richard H. & Pianigiani, Giulio, 1991. "Statistical dynamics and economics," Journal of Economic Behavior & Organization, Elsevier, vol. 16(1-2), pages 37-83, July.
    2. Goeree, Jacob K. & Hommes, Cars & Weddepohl, Claus, 1998. "Stability and complex dynamics in a discrete tatonnement model," Journal of Economic Behavior & Organization, Elsevier, vol. 33(3-4), pages 395-410, January.
    3. Tuinstra, Jan, 2000. "A discrete and symmetric price adjustment process on the simplex," Journal of Economic Dynamics and Control, Elsevier, vol. 24(5-7), pages 881-907, June.
    4. Varian, Hal R, 1975. "A Third Remark on the Number of Equilibria of an Economy," Econometrica, Econometric Society, vol. 43(5-6), pages 985-986, Sept.-Nov.
    5. Kaizouji, Taisei, 1994. "Multiple equilibria and chaotic tatonnement: Applications of the Yamaguti-Matano theorem," Journal of Economic Behavior & Organization, Elsevier, vol. 24(3), pages 357-362, August.
    6. Debreu, Gerard, 1972. "Smooth Preferences," Econometrica, Econometric Society, vol. 40(4), pages 603-615, July.
    7. Day, Richard H. & Pianigiani, Giulio, 1991. "Statistical Dynamics and Economics," Working Paper Series 293, Research Institute of Industrial Economics.
    8. Anjan Mukherji, 1999. "A simple example of complex dynamics," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 14(3), pages 741-749.
    9. Weddepohl, Claus, 1995. "A cautious price adjustment mechanism: Chaotic behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 27(2), pages 293-300, July.
    10. Saari, Donald G, 1985. "Iterative Price Mechanisms," Econometrica, Econometric Society, vol. 53(5), pages 1117-1131, September.
    11. Dierker, Egbert, 1972. "Two Remarks on the Number of Equilibria of an Economy," Econometrica, Econometric Society, vol. 40(5), pages 951-953, September.
    12. Tuinstra, Jan, 1997. "A price adjustment process with symmetry," Economics Letters, Elsevier, vol. 57(3), pages 297-303, December.
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    Cited by:

    1. Cavalli, Fausto & Naimzada, Ahmad, 2015. "A tâtonnement process with fading memory, stabilization and optimal speed of convergence," Chaos, Solitons & Fractals, Elsevier, vol. 79(C), pages 116-129.

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    More about this item

    Keywords

    Multiple equilibria; Tâtonnement process; Nonlinear dynamics; Chaos;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics

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