Updating Wealth in an Asset Pricing Model with Heterogeneous Agents

Figure 4

State variable 𝑥_𝑡 versus time for the initial condition 𝑥₀=1.1, 𝑚₀=0.8 and 𝑤₀=0.8 and parameter values 𝛼=1, 𝜆=1, 𝜎²=1, 𝑟=0.02, 𝐶=0.5, 𝛽=1. In panel (a) 𝑎=0.35, in panel (b) 𝑎=0.4, in panel (c) 𝑎=0.45.

(a)

(b)

(c)