Heterogeneous beliefs in markets impact stability and price dynamics significantly.
This paper looks at how different beliefs about prices can affect market stability. It divides agents into two groups: fundamentalists and chartists. Fundamentalists believe in a steady price, while chartists use an adaptive process to predict prices. The study shows that having more fundamentalists than chartists can make the market more stable. The type of expectations agents have and how often they switch between beliefs also play a role in market stability.