Price Dynamics Modeling: Chaos Model Application

Abstract

The article investigates the dynamics of price index that is described by nonlinear difference equations. The simulation model takes into account different initial positions of system as well as different parameters' values. The decision-making process depends on the values of exogenous factors that affect the system behavior and lead to stability or instability results. The simulation results revealed the bifurcation point and showed that the system can behave unpredictable and demonstrate chaos dynamics even with small change in initial conditions. If the initial value is greater than equilibrium point it has been obtained the attraction for the system. If the initial value is less than equilibrium point it has been obtained the repelling for the system. The price dynamics showed a saddle-node bifurcation that determined the equilibrium points of the system and exhibited the U-shaped curve.