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Tagged with expected-utility macroeconomics
2 questions
2
votes
1
answer
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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 ...
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 ...