P expressed in the convenient cost units. , representing measurement error, is a normally distributed random variable, but with mean 0 and standard deviation invariant through the iteration process. The agents process this information to obtain a posterior distribution of performances. This processing is done by taking the convolution products of Gaussian integrals corresponding to the prior and to the information obtained from other purchasers. An example of updating the internal representation of an agent according to equations 2 and 3. In this example, the posterior distribution is shifted and sharpened with respect to the prior.
Economic agents are adverse to risk.
The greater the uncertainty in the value of a product, the less they are likely to buy it.