STABILITY OF EQUILIBRIA UNDER GENETIC-ALGORITHM ADAPTATION: AN ANALYSIS
- 1 March 1998
- journal article
- research article
- Published by Cambridge University Press (CUP) in Macroeconomic Dynamics
- Vol. 2 (1) , 1-21
- https://doi.org/10.1017/s1365100598006014
Abstract
The stability of stationary equilibria under genetic-algorithm adaptation is studied in an overlapping-generations economy with a unique, monetary steady-state and two-period cyclic equilibria. Agents use the genetic algorithm to update their labor-supply decisions. The results of simulations and the analysis of the dynamics show that the two-period cycle is stable and that the steady-state equilibrium is unstable under genetic-algorithm adaptation. The dynamics are driven primarily by the wealth and substitution effects that lead to the algorithm's convergence to the two-period cycle.Keywords
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