CHAOS IN NONLINEAR DYNAMICAL-SYSTEMS EXEMPLIFIED BY AN RESEARCH-AND-DEVELOPMENT MODEL

Nonlinear dynamical systems theory plays an increasing role in the mat hematical analysis of economic problems. The main purpose of this pape r is to present some basic concepts and results occuring in this conte xt to the OR/MS community. After a brief review of a few papers on cha otic management systems, we present a time-discrete model which shows on the one hand the effects of a firm's R&D-activity on their turnover , and on the other hand takes into consideration the important role of the management for the firm's behaviour. The influence of the managem ent is modeled by a dynamic nonlinear decision rule, which is well-kno wn in behavioural decision theory. The counteracting effects of a firm 's evolution and the reactions of the management may lead to erratic b ehaviour.