Updating Wealth in an Asset Pricing Model with Heterogeneous Agents

Figure 5

State variable 𝑤_𝑡 versus time for an i.c. 𝑥₀=0.8, 𝑚₀=1 and 𝑤₀=1 and parameter values 𝛼=0.5, 𝜆=1, 𝜎²=1, 𝑟=0.02, 𝐶=0.5, 𝛽=1. (a) 𝑎=0.1. Periodical fluctuations. (b) 𝑎=0.5. Convergence.

(a)

(b)