Stability and Encoding

Abstract

The main purpose of these notes is to demonstrate that genetic learning is a plausible model of interaction between economic agents and to study the long term properties of this learning process. The analytical results from chapter 4 have given us some insights here and keeping in mind the behavioral interpretation of the considered process the obtained insights provide information about adaptive learning per se. However, besides these economic implications the results of chapter 4 may also be very useful for the appropriate shaping of the algorithm. In this chapter I will concentrate on this aspect of genetic learning. We will see that a mathematical analysis may also be of great help for anyone who actually implements a simulation of an economic system with a GA. In particular I will propose a method which facilitates the learning of economic equilibria in a model. This may be of great importance if simulations are carried out in models where the equilibria are not a priori known. In such models a GA may be a useful tool to determine equilibria and a technique which facilitates the reaching of equilibria is of great importance.