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2 votes
1 answer
80 views

Proof of the Lucas' Cost of Business Cycles

I am trying to derive the parameter used by Lucas to measure the cost of business cycles, namely: derived in the paper "Macroeconomic Priorities". I already searched in several papers but I ...
Diogo Ferreira's user avatar
5 votes
2 answers
343 views

What is the intuition behind Expected Utility Theorem?

I am referring to the definition in Proposition 6.B.3 on Page 176 of Mas Colell. I follow the formal proof and the application of the Independence axiom at various steps (mathematical application of ...
Rumi's user avatar
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