Questions tagged [equilibrium-selection]
The equilibrium selection tag applies to question which deal with the issue of selecting one or more out of multiple equilibria based on some criterion.
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Why Sequenial Equilibrium (SE) imposes no restrictions on the off-equilibrium beliefs in the Spence's model?
I read some lectures on the Spence's model. Some (see e.g. P31 of lecture PPT from MIT game thoery course) mention that SE imposes no restrictions on the off-equilibrium beliefs but without proof. I ...
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Equation: If the equilibrium level of GDP is $21,500, what is the marginal propensity to consume?
Equations for $C$, $I$, $G$, and $NX$ are given below. If the equilibrium level of $GDP$ is $\$21,500$, what is the marginal propensity to consume?
$$C = 1,500 + (MPC)\cdot Y$$
$$I = 1,000$$
$$G = 2,...