IMPROVING THE PERFORMANCE OF AN ECONOMIC-SYSTEM - CONTROLLING CHAOS

In this paper we use a simple model of evolutionary market dynamics to illustrate how chaotic behavior can be controlled by making small cha nges in a parameter that is accessible to the decision makers. This ap proach is commonly referred to as 'targeting' - one can easily switch from a chaotic evolution of the market to any desired regular motion. We show that complex dynamics leads to inferior performance in our mod el and that an application of such a correction mechanism by the decis ion makers of the firms yields a considerable improvement in the syste m's economical properties in terms of profits and profitability. We pr esent numerical simulations in order to illustrate the effectiveness o f this method.