How "Realistic" is the Cobweb Hypothesis?

So much for the cobweb hypothesis. Is it true? Is it applicable? To which particular examples?

Critics of the cobweb hypothesis pointed out that it assumes that farmers are pretty stupid. If they weren't stupid, they would figure out that prices don't stay at the same level from one year to the next. The prices fluctuate, and at least in some markets they tend toward the equilibrium level.

What the cobweb example shows is that if

supply decisions are based on the current price, and
there is a delay between the decision how much to produce and the sale of that production

then prices can fluctuate even if supply and demand are stable. This was offered as a partial explanation of the wide fluctuation of prices in agricultural markets. The second of the two assumptions, the delay between decision and production, clearly applies to agriculture -- and to chip manufacture, and to some other markets. The controversy has to do with the first assumption. Will "rational" producers base their decisions on the current price?

In any case (the critics pointed out) supply and demand are not stable in agricultural markets, and there could be a lot of price fluctuation even if prices were always exactly at the equilibrium.

Supply Fluctuations