We study a new class of nonlinear cooperative phenomena that occur when light propagates in direct-gap semiconductors. The nonlinearity here is due to a process, first discussed by A. L. Ivanov, L. V. Keldysh, and V. V. Panashchenko, in which two excitons are bound into a biexciton by virtue of their Coulomb interaction. For the geometry of a ring cavity, we derive a system of nonlinear differential equations describing the dynamical evolution of coherent excitons, photons, and biexcitons. For the time-independent case we arrive at the equation of state of optical bistability theory, and this equation is found to differ considerably from the equations of state in the two-level atom model and in the exciton region of the spectrum. We examine the stability of the steady states and determine the switchover times between the optical bistability branches. We also show that in the unstable sections of the equation of state, nonlinear periodic and chaotic self-pulsations may arise, with limit cycles and strange attractors being created in the phase space of the system. The scenario for the transition to the dynamical chaos mode is found. A computer experiment is used to study the dynamic optical bistability. Finally, we discuss the possibility of detecting these phenomena in experiments.