A note on biased fundamentalists |
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Authors: | Ahmad K Naimzada Giorgio Ricchiuti |
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Institution: | 1. Dept. of Economics, Management and Statistics, University of Milano—Bicocca, Milan, Italy;2. Dept. of Mathematics and Applications, University of Milano—Bicocca, Milan, Italy |
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Abstract: | In this note, we report a result not recognized in the model analyzed in Naimzada and Ricchiuti (2009) 1]: heterogeneity may have an ambiguous role in the complex dynamics. Indeed, given high reactivity of either market maker or agents, an increasing heterogeneity initially stabilizes the price (through a subcritical period two cycle) and then it destabilizes the price (initially through a pitchfork bifurcation). Moreover, we define better the structure of beliefs, highlighting their position in comparison with a unique (not observed) fundamental value and assuming that agents are pure biased traders. |
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