A probabilistic framework for hysteresis

We introduce a probabilistic framework for hysteresis, a ubiquitous phenomenon in economic situations involving sunk costs. The framework is applied to a simple model of a firm's market entry/exit decisions. We study the influence of sunk cost size, width of the hysteretic loop, and of availability of local information on wealth creation in a sector of the economy.

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Year of publication:	2000
Authors:	Grinfeld, M. ; Piscitelli, L. ; Cross, R.
Published in:	Physica A: Statistical Mechanics and its Applications. - Elsevier, ISSN 0378-4371. - Vol. 287.2000, 3, p. 577-586
Publisher:	Elsevier
Subject:	Hysteresis \| Discrete dynamical systems \| Investment theory

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010873637