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,...
Christina Campbell's user avatar