E. Barucci et al., Endogenous fluctuations in a bounded rationality economy: Learning non-perfect foresight equilibria, J ECON THEO, 87(1), 1999, pp. 243-253
We study forward-looking economic models assuming that agents take one step
ahead expectations looking back k time periods. We show that the dynamics
of the economy with such an expectation Function are characterized by the c
oexistence of perfect foresight and nonperfect foresight cycles. The stabil
ity of all these periodic solutions under bounded rationality is related to
the stability of the perfect foresight cycles. Journal of Economic Literat
ure Classification Numbers: C62, D83, D84; E31, E32. (C) 1999 Academic Pres
s.