Tags:adaptive expectations, C# desktop application, computer simulation, dynamic, economics, general market model and modeling
Abstract:
Economics has entered the stage of deep transformation of its bases. The traditional method of constructing a scientific theory is first to synthesize and investigate mathematical framework; this traditional approach was taken as a principle of our research. Finally the mathematical theory of the general dynamic market model has recently been constructed, the main elements of which are given in this paper. The next step is to build models of specific real markets based on the general theory. The C# application Model was created especially to support the synthesis of concrete models based on the general theory. The most important goal of this paper is to propose cooperation in such research. Results of the research: the crucial factors which ensure the market stability are the market coherence and the market intention to adaptive expectations. If no any firm uses naive expectations in the market then with sufficiently small incoherence there is unique Nash equilibrium which is stable for all acceptable values of parameters. The increase of naive expectations leads to stability loss, to flip bifurcations and finally to chaos. The increase of number of firms also as a rule leads to stability loss and finally to chaos. At sufficiently small changes in production per step, systems of general dynamic market model turns into systems of neoclassical microeconomics.
The General Dynamic Market Model and Software Application for Support Modeling Process