On "Badly Behaved" Dynamics. Some Applications of Generalized Urn Schemes to Technological and Economic Change

Dosi, G. & Kaniovski, Y.M. (1994). On "Badly Behaved" Dynamics. Some Applications of Generalized Urn Schemes to Technological and Economic Change. IIASA Research Report (Reprint). IIASA, Laxenburg, Austria: RR-94-012. Reprinted from Journal of Evolutionary Economics, 4(2):93-123 [1994].

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Abstract

Adaptive (path dependent) processes of growth modeled by urn schemes are important in several fields of application: biology, physics, chemistry, and economics. In this paper we present a general introduction to urn schemes, together with some new results. We review the studies that have been conducted on technological dynamics by means of such schemes. We demonstrate the phenomena of multiple equilibria, different convergence rates for different limit patterns, locally positive and locally negative feedbacks, and limit behavior associated with non-homogeneity of economic environment where producers (firms) are operating. We also show that the above urn processes represent a natural and convenient stochastic replicator dynamic that can be used in evolutionary games.

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