Evolutionary competition between prediction rules and the emergence of business cycles within Metzler's inventory model

摘要

We revise Metzler's well-known inventory model by developing a framework in which producers can either apply a simple but cheap extrapola-tive or a more sophisticated but expensive regressive forecasting rule to predict future sales. Producers are boundedly rational in the sense that they tend to select forecasting rules with a high evolutionary fitness. Using a mixture of analytical and numerical tools, we attempt to describe the characteristics of our model's dynamical system. Our results suggest that the evolutionary competition between heterogeneous predictors may lead to irregular fluctuations in economic activity.