  The notion that economies should normally be in equilibrium is by now
well-established; equally well-established is that economies are almost never
precisely in equilibrium. Using a very general formulation, we show that under
dynamics that are second-order in time a price system can remain away from
equilibrium with permanent and repeating opportunities for arbitrage, even when
a damping term drives the system towards equilibrium. We also argue that
second-order dynamic equations emerge naturally when there are heterogeneous
economic actors, some behaving as active and knowledgeable arbitrageurs, and
others using heuristics. The essential mechanism is that active arbitrageurs
are able to repeatedly benefit from the suboptimal heuristics that govern most
economic behavior.
