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| Author: | Mitra, T. |
| Title: | On the relationship between discounting and complicated behavior in dynamic optimization models |
| Journal: | Journal of Economic Behavior and Organization
1998 : JAN 15, VOL. 33:3-4, p. 421-434 |
| Index terms: | ECONOMIC BEHAVIOUR DYNAMIC MODELS OPTIMIZATION |
| Language: | eng |
| Abstract: | This paper explores the relationship between discounting and complicated behavior in dynamic optimization models. An inverse relationship between the discount and factor of a dynamic optimization model and the topological entropy of the corresponding optimal policy function is established. For an aggregate model, this generalizes a result obtained by Montrucchio and Sorger. The generalization makes it possible to apply directly the results developed by Block, Guckenheimer, Misiurewicz and Young on the computation of the topological entropy of dynamical systems to obtain upper bounds on the discount factor necessary for the occurrence of topological chaos in aggregate dynamic optimization models. |
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