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HOMEOSTATIC VERSUS ACTIVE POLICIES IN A NONLINEAR OPTIMAL CONTROL PROBLEM
Author(s) -
Sacco Pier Luigi
Publication year - 1993
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.1993.tb00757.x
Subject(s) - futures studies , nonlinear system , sensitivity (control systems) , control (management) , mathematical economics , optimal control , economics , mathematical optimization , mathematics , computer science , physics , engineering , artificial intelligence , management , quantum mechanics , electronic engineering
Perfect foresight dynamics require local determinateness and, consequently, sensitivity to initial conditions. If such dynamics have to be computable, exact integration is needed. We study a non‐linear optimal control problem which cannot be integrated exactly; we also introduce some simpler, implementable policy rules and compare their relative performance. Our results make out a case against perfect foresight as a positive theory of expectations formation and as a useful modelling tool.