A synergetic approach to speculative price volatility

In this paper we consider the markets of three assets (a risky asset, a riskless asset, and a foreign currency). Each market consists of two typical types of investors: fundamentalists and bandwagon traders. We propose a Synergetic model that represents speculative dynamics. We show the characteristic patterns of speculative prices (speculative bubbles and speculative chaos) which are generated by trading between the fundamentalists and bandwagon traders.