@techreport{0af598155f3442798b9cb8d21deec2e8,
title = "Discrete beliefs space and equilibrium: a cautionary note",
abstract = "Bounded rationality requires assumptions about ways in which rationality is constrained and agents form their expectations. Evolutionary schemes have been used to model beliefs dynamics, with agents choosing endogenously among a limited number of beliefs heuristics according to their relative performance. This work shows that arbitrarily constraining the beliefs space to a finite (small) set of possibilities can generate artificial equilibria that can be stable under evolutionary dynamics. Only when {"}enough{"} heuristics are available, beliefs in equilibrium are not artificially constrained. I discuss these findings in light of an alternative approach to modelling beliefs dynamics, namely adaptive learning.",
keywords = "expectations, evolutionary dynamics, learning, equilibrium",
author = "Michele Berardi",
year = "2018",
month = jul,
day = "13",
language = "English",
series = "Centre for Growth and Business Cycle Discussion Paper Series",
publisher = "The University of Manchester",
number = "242",
type = "WorkingPaper",
institution = "The University of Manchester",
}