Prepared for Trento Conference in honor of Robert Clower; published in Money, Markets and Method: Essays in Honour of Robert W. Clower, ed. P. Howitt, E. de Antoni and A. Leijonhufvud, Cheltenham: Edward Elgar, 1999.

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Learning and the Stock Flow Model

David K. Levine

April 16, 1996

revised: December 29, 1997

Abstract: We consider an application of the stock flow model of intertemporal preference to the problem of strategic "learning about learning" with the best response dynamic. We show that when players are myopic, but not as in the usual analysis completely so, that we can find an approximate solution that is "implementable" in the sense that it does not require solving an equilibrium system. Paradoxically, in the steady state, this increase in patience and sophistication by the players generally lowers their utility.