Computational Framework for Stabilizing Nonlinear Overlapping Generations Economies under Expectation Ambiguity

Computational Framework for Stabilizing Nonlinear Overlapping Generations Economies under Expectation Ambiguity | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Computational Framework for Stabilizing Nonlinear Overlapping Generations Economies under Expectation Ambiguity Illych Alvarez, Lucia Pico, Ivy Peña This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8823695/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Overlapping generations (OLG) economies with nonlinear decision rules and imperfect expectations often require simulation-based analysis to assess their transition dynamics and the stability of fiscal policy regimes. Interactions between intertemporal substitution, wealth effects, and feedback-based fiscal rules may generate persistent oscillations or irregular regime-switching behavior, complicating the evaluation of pension systems and tax–transfer sustainability under uncertainty. This paper develops a computational economic framework for the design and evaluation of robust, rule-based fiscal stabilization mechanisms in discretetime OLG economies subject to bounded rationality and expectation ambiguity. Expectation imprecision is explicitly incorporated into the modelling environment, and fiscal adjustment is interpreted as an automatic policy rule implemented by a public authority operating under imperfect information. Methodologically, the framework combines (i) fuzzy-valued expectation operators to represent ambiguity in agents’ beliefs and policy perceptions, (ii) an α-consistent neural interpolation module for reconstructing latent macroeconomic and fiscal states from noisy or incomplete signals, and (iii) an adaptive delayed-feedback fiscal adjustment rule whose parameters are optimized using evolutionary algorithms. Numerical simulation experiments show that the proposed approach enlarges the domain of attraction of fiscally feasible steady states and significantly attenuates destabilizing fluctuations in savings–consumption–transfer dynamics across a wide range of uncertainty scenarios. The results suggest that explicitly accounting for expectation ambiguity allows fiscal authorities to implement robust stabilization rules that operate as automatic stabilizers, without relying on precise forecasts or discretionary interventions. Overlapping generations computational economics bounded rationality expectation ambiguity fuzzy–neural modelling simulation-based stabilization Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8823695","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":627181111,"identity":"5c1479bb-af5c-4cc4-963e-2eab1e598868","order_by":0,"name":"Illych Alvarez","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA7klEQVRIiWNgGAWjYBACNgbmBjCDH0wWAPEBgloYIVokwZQBEVoYYFoMDhCrhY/9YJvEzz029sbH2589+GDAIMd3I4HxwQ98DuNJbJPseZbGbHbmjLnhDAMGY8kbCcyGPXj9kthswHPgMJvZjRw2aR4DhsQNNxLYpPE5jI3/YbPhnwP/eYznP38G0lIP1ML+G68WicTGxzwHDkgYSDCYgbQkGABtYcav5WHjY5kDyQYSZ3JAfpEwnHnmYbMkPr/I9ycfOPjmgJ09f/txYIhV2MjzHU8++AFfiKHYCMQSDPCYIlbLKBgFo2AUjAJMAACdTknOEt01jgAAAABJRU5ErkJggg==","orcid":"","institution":"Escuela Superior Politecnica del Litoral","correspondingAuthor":true,"prefix":"","firstName":"Illych","middleName":"","lastName":"Alvarez","suffix":""},{"id":627181118,"identity":"b6c27647-a274-4f29-b4fe-e04c80215222","order_by":1,"name":"Lucia Pico","email":"","orcid":"","institution":"Catholic University of Santiago de Guayaquil","correspondingAuthor":false,"prefix":"","firstName":"Lucia","middleName":"","lastName":"Pico","suffix":""},{"id":627181119,"identity":"67b3e32f-f300-4fd6-9ef1-fb7b3aa499d6","order_by":2,"name":"Ivy Peña","email":"","orcid":"","institution":"Escuela Superior Politecnica del Litoral","correspondingAuthor":false,"prefix":"","firstName":"Ivy","middleName":"","lastName":"Peña","suffix":""}],"badges":[],"createdAt":"2026-02-08 18:53:28","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-8823695/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8823695/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":107706669,"identity":"acfb9ee6-c951-4014-ae12-1ad54a022c5b","added_by":"auto","created_at":"2026-04-24 09:18:28","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":705735,"visible":true,"origin":"","legend":"","description":"","filename":"NuevoArchivoWinRARZIP.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8823695/v1_covered_baa0376c-387f-41c7-b5a1-852dd39164a8.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"\u003cp\u003eComputational Framework for Stabilizing Nonlinear Overlapping Generations Economies under Expectation Ambiguity\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Overlapping generations, computational economics, bounded rationality, expectation ambiguity, fuzzy–neural modelling, simulation-based stabilization","lastPublishedDoi":"10.21203/rs.3.rs-8823695/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8823695/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eOverlapping generations (OLG) economies with nonlinear decision rules and imperfect expectations often require simulation-based analysis to assess their transition dynamics and the stability of fiscal policy regimes. Interactions between intertemporal substitution, wealth effects, and feedback-based fiscal rules may generate persistent oscillations or irregular regime-switching behavior, complicating the evaluation of pension systems and tax–transfer sustainability under uncertainty. This paper develops a computational economic framework for the design and evaluation of robust, rule-based fiscal stabilization mechanisms in discretetime OLG economies subject to bounded rationality and expectation ambiguity. Expectation imprecision is explicitly incorporated into the modelling environment, and fiscal adjustment is interpreted as an automatic policy rule implemented by a public authority operating under imperfect information. 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