The Formation Mechanism of Social Expectation Based on the DeGroot Model and the Effectiveness of the Center Bank's Expectation Guidance

Abstract

Abstract:

Based on the DeGroot's social influence model, by using the methods of complex adaptive system simulation, the paper discusses the convergence, the consensus, the speed and the accuracy of the price expectation as well as every agent' degree of influence under three social influence structures. Then, the paper further simulates the influence of the decrease of the center bank's credibility and the effectiveness of the center bank's expectation guidance. The study shows that the price expectations can converge and reach a consensus under most situations, but differ in the speed and the accuracy. The descent of the center bank's credibility will result in the slower speed of the social expectation convergence as well as the bigger expectation error. The center bank can improve the degree of its influence and the social expectation's accuracy through the guidance of the institutions and the public's expectations.

Key words: DeGroot' smodel, social learning, formation mechanism of expectation, expectation guidance

Kuang Xiong. The Formation Mechanism of Social Expectation Based on the DeGroot Model and the Effectiveness of the Center Bank's Expectation Guidance[J]. , 2016, 28(7): 200-212.

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