A model for a financial asset is constructed with two types of agents. The agents differ in terms of their beliefs. The proportions of the two types change over time according to a stochastic process which models the interaction between the agents. Thus, unlike other models, agents do not...

This paper presents a view of the economy as a complex system with heterogeneous interacting agents who collectively organize themselves to generate aggregate phenomena which cannot be regarded as the behavior of some average or representative individual. There is an essential difference between...