Editing Cobweb model (section)

== Evidence ==

=== Livestock herds ===

The cobweb model has been interpreted as an explanation of fluctuations in various [[livestock]] markets, like those documented by Arthur Hanau in German hog markets; see [[Pork cycle]]. However, Rosen et al. (1994) proposed an alternative model which showed that because of the three-year life cycle of beef cattle, cattle populations would fluctuate over time even if ranchers had perfectly [[rational expectations]].<ref>Edward Lotterman, [http://www.twincities.com/lotterman/ci_20293708/shipping-cattle-and-some-careers-cycles-play-out "In shipping, cattle and some careers, cycles play out"], Twin Cities Pioneer Press, 4. April 2012: Real World Economics</ref>

=== Human experimental data ===
In 1989, Wellford conducted twelve experimental sessions each conducted with five participants over thirty periods simulating the stable and unstable cases. Her results show that the unstable case did not result in the divergent behavior we see with cobweb expectations but rather the participants converged toward the [[rational expectations]] equilibrium. However, the price path variance in the unstable case was greater than that in the stable case (and the difference was shown to be statistically significant).

One way of interpreting these results is to say that in the [[Long run and short run|long run]], the participants behaved as if they had rational expectations, but that in the short run they made mistakes. These mistakes caused larger fluctuations in the unstable case than in the stable case.

=== Housing sector in Israel ===

The residential construction sector of [[Israel]] was, primarily as a result of [[Bricha|waves of immigration]], and still is, a principal factor in the structure of the [[business cycles]] in Israel. The increasing population, financing methods, higher income, and investment needs converged and came to be reflected through the skyrocketing demand for housing. On the other hand, technology, private and public entrepreneurship, the housing inventory and the availability of workforce have converged on the supply side. The position and direction of the housing sector in the business cycle can be identified by using a cobweb model.