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SD ✦ NN

Adaptive Cobweb

Demand: D(P) = a − b·P. Supply: S(P^e) = c + d·P^e. Naive: P^e_t = P_{t−1}. Adaptive: P^e_t = P^e_{t−1} + λ(P_{t−1} − P^e_{t−1}). Smaller λ damps oscillations.

step n0
P_n—
P^e_n—
P* equilibrium—
stability d/b·λ—