Updating Wealth in an Asset Pricing Model with Heterogeneous Agents

Figure 1

Basin of attraction in the plane (𝑚,𝑤) for the initial condition 𝑥₀=1 and parameter values 𝑎=1, 𝛼=4, 𝜆=1, 𝜎²=1, 𝑟=0.02, 𝐶=0.5 and 𝛽=1. The white point corresponds to 𝐸_𝑓 while the black point corresponds to 𝐸_𝑛𝑓.