Starting from a Muthian cobweb model, we extend the profit-based evolutionary setting in Hommes and Wagener (2010) populated by pessimistic, optimistic and unbiased fundamentalists, by assuming that agents face heterogeneous information costs, inversely proportional to the entity of their bias....

We compare forecasts from different adaptive learning algorithms and calibrations applied to US real-time data on inflation and growth. We find that the Least Squares with constant gains adjusted to match (past) survey forecasts provides the best overall performance both in terms of forecasting...

Under adaptive learning, recursive algorithms are proposed to represent how agents update their beliefs over time. For applied purposes these algorithms require initial estimates of agents perceived law of motion. Obtaining appropriate initial estimates can become prohibitive within the usual...