Contents 1. Introduction 2. Fundamentalists and chartists 2.1 An early example 2.2 Survey data on expectations 2.3 An exchange rate model 3. Noise traders and behavioral finance 3.1 Rational versus noise traders 3.2 Informed arbitrage versus positive feedback trading 4. Complex dynamics 4.1 An early disequilibrium model with speculators 4.2 Market maker models 4.3 A chaotic exchange rate model 5. Interacting agents 5.1 An exchange rate model with local interactions 5.2 Social interactions 6. Heterogeneity and some stylized facts 6.1 Socioeconomic dynamics of speculative markets 6.2 Dynamical behavior and time series properties 7. Costly sophisticated versus cheap simple rules 7.1 Examples 7.2 Rational versus naive expectations 8. Asset pricing model with heterogeneous beliefs 8.1 The model 8.2 Few-type examples 8.3 Many trader types 9. Concluding remarks and future perspective References * I would like to thank Buz Brock for raising my interest in heterogeneous agent modeling. Our many discussions and joint work over the past decade have greatly influenced the ideas underlying this chapter. An earlier draft of this chapter has been presented at the Handbook workshop at the
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