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GENETIC ALGORITHM LEARNING TO CHOOSE AND USE INFORMATION

Published online by Cambridge University Press:  25 May 2001

Bryan R. Routledge
Bryan R. Routledge
Affiliation:
Carnegie Mellon University
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Abstract

A genetic algorithm (GA) is used to model learning in a financial model similar to the Grossman–Stiglitz model. Individuals need to learn how to use a signal, how to make an inference about a signal from a market-clearing price, and whether or not a signal is worth acquiring. We provide examples in which the GA does and does not converge to the rational expectations equilibrium. Similar to earlier results, the behavior depends heavily on the rate of experimentation or mutation in the GA and the size of the risky-asset supply noise in the economy.

Keywords

LearningGenetic AlgorithmRational Expectations
Type
Research Article
Information
Macroeconomic Dynamics , Volume 5 , Issue 02 , April 2001 , pp. 303 - 325
Copyright
© 2001 Cambridge University Press

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