Article ID Journal Published Year Pages File Type
5062096 Economics Letters 2008 7 Pages PDF
Abstract

We consider an environment in which traders with finite memory update their forecast rules at random intervals by OLS. In this context, overparameterization of the forecast rules can destabilize the learning dynamics. This instability tends to be attenuated by greater memory and less frequent updating.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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