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Questions tagged [self-study]

Questions about self-studying economics, including curriculum design, study strategies, resources, etc.

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15 views

Revenue maximization problem

There are $N>0$ Households in an economy. The government has aim to maximize a weighted average of income by imposing tax on the rich people and redistribute the tax revenue to the labor ones. ...
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2answers
40 views

Question on Central bank loss function interpretation

How do you interpret this central bank’s loss function: $$L(\hat x, \pi)=\alpha \hat{x}^2+(\pi-\pi^T)^2$$ where $\alpha >0$ and $\hat x$ is output gap. Phillips curve is $\pi = \theta \hat{x}+\...
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1answer
52 views

Central bank loss function (I did a solution, but it doesn’t totally make sense I guess)

I have question on central bank loss function. We know that the central bank loss function is $$L(\pi, \bar{Y})= (\pi- \pi^e)^2+\beta \bar {Y}^2$$ And we know that fisher equation is $$i=r+\pi^e$$...
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2answers
48 views

The relationship between profit and wages

It seems obvious that an individual company increases their profits when they reduce wages or increase automation or some such. But if wages fell universally because of this, wouldn't that decrease ...
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0answers
22 views

Recommendation on economics books for a statistician

I have mainly an statistics/informatics background and i have basically not knowledge in economics. What some good books to star given my background? Edit: My principal interest is stock market ...
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1answer
40 views

OLS and 2SLS normal equations

For a system of equations with $M=2$ endogenous variables, $ Y=\begin{bmatrix} y_1 & y_2 \end{bmatrix}$ and $K=3$ exogenous variables, $X=\begin{bmatrix} x_1 & x_2 & x_3 \end{bmatrix}$. ...
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1answer
29 views

Sequential Price Competition for Perfect Complements

There are two goods, $1$ and $2$ produced by two firms at zero marginal costs. The goods are perfect complements. The demand for each goods is: $Q_1=Q_2=a-(p_1+p_2)$. The prices are set sequentially, ...
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0answers
16 views

Questions regarding 'Efficient Trade with Interdependent Values' by Marek Pycia and Peng Wang,2015

This question is with reference to the paper 'Efficient Trade with Interdependent Values' by Marek Pycia and Peng Wang,2015(See here). At page no. 4 of the paper, the authors describe $v_i$ as the ...
2
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2answers
93 views

Bertrand Duopoly Equilibrium for Discrete Prices

There are two identical firms, $1$ and $2$, with zero marginal costs. They produce homogenous product, which is demanded by a unit mass of identical consumers, each of which has inelastic unit demand ...
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0answers
33 views

How to show that a leontief utility function is homothetic?

usually what i do to show that a utility function is homothetic is by either showing that the function is homogeneous or if the MRS is homogeneous of degree 0. However the MRS is not defined. So im ...
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11 views

Reference Request: The Effect of Wealth in Society

I am new to the subject and I am looking for some help. It goes without saying that the economy is the center of society, and the theory of economics deals with that, But I am especially interested ...
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1answer
174 views

Preference: Convexity and Monotonicity

I need an example of a Convex, non-monotonic preference Non-convex, monotonic preference I figured that an example of non-convex, monotonic utility preference could be $U(x,y)=x^2+y^2$. For convex, ...
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24 views

optimization problem for two individuals

Two flat mates 1 and 2, rent a flat and play their own music on the only CD player owned by flat-owner. They both like their own music, but dislike the music played by the other. Given the timing ...
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0answers
36 views

two period consumption problem

Ms. A earns 25,000 dollars in period 1 and 15,000 dollars in period 2. Mr. B earns 15,000 dollars in period 1 and 30,000 dollars in period 2. they can borrow money at an interest rate of 200% and can ...
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1answer
37 views

NASH equilibrium [closed]

How to approach questions like these: In a two player static game with a discrete strategic space that permits each player to chose one of the four possible strategies what is the maximum number of ...
2
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1answer
31 views

How do you keep up to date and find the most relevant papers?

What tools or methods you use to keep up with the frontier of the field? I follow some specific papers and authors. I was wondering what's the best way to keep up to date with relevant things with so ...
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1answer
37 views

Neoclassical model with proportional taxes

In a certain economy, time is discrete with periods $t=0,1,2,...$. The economy is populated by many households and identical firms. The utility of a household is: $\displaystyle\sum^{\infty}_{t=0}\...
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1answer
55 views

Spence's Job Market Signaling Game

I have a little doubt in the Job Market Signalling Game. I am referring to A Primer in Game Theory: Gibbons, Chapter 4, Signaling Games The attached paragraph refers to a Separating Equilibrium case ...
2
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1answer
74 views

Repeated Game SPNE

I approached this question in this way: $(P_1,P_2), (R_1,R_2), (S_1,S_2)$ are the Nash Equilibria of the Stage 1 game. For the given strategy to be sustained as SPNE, there should be no way unilateral ...
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1answer
46 views

SPNE and Pareto Optimality

"The SPNE of a sequential game might not necessarily be Pareto Optimal" I understand the definitons of Nash Equilibria and Pareto Optimality and that these are not synonymous concepts. An example in ...
4
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1answer
53 views

Expected payment in a second price auction with affiliation

The symmetric bidding strategy in a second-price auction with affiliation is given by $\beta(x)=v(x,x)$, where $v(x,y)=E[V_1|X_1=x,Y_1=y]$ (here $Y_1$ is the highest ordered statistic among the ...
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2answers
64 views

Bayesian Nash Equilibria: Strong and Weak Types

I need a little help with the question. I understand that since both players have two types each, there will be 4 different payoff matrices to be considered, $(S,S)$,$(S,W)$,$(W,S)$,$(W,W)$, each type ...
4
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1answer
144 views

Auctions with affiliation

This problem is an example given in Vijay Krishna's Auction Theory (2nd Edition, Chapter-6, Example 6.2). The problem is as follows: Suppose $S_1,S_2$, and $T $ are uniformly and independently ...
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0answers
33 views

Take It Or Leave It Strategy: Social Optimum

Here is what I understood Using Backward Induction, I inferred that buyer offers a price, say, $P$ and the seller will sell only if $P \geq c(I)$. Setting the lowest possible Price that will ensure ...
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0answers
11 views

Relation between Captial Market Line and Security Market Line

I am referring to the book, "William Sharpe et al, Investments, 6th Edition. I am trying to wrap my head around some lines from the book, pertaining to Security Market Line. It reads, "Earlier it ...
1
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1answer
23 views

Is there book or research on economically sustainable design of town or village?

I'm looking for a book which may help to design a self-sustainable small settlement, which can maintain its own economy with limited connections to the outside world. Prefereably it should answer ...
3
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3answers
182 views

Book recommendations: Introduction to economics

I recently made my first trip to a foreign country. I'm quite amazed by how things work. Why are things priced differently at different places? Is the bed-sheet that I bought from that country worth ...
3
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1answer
104 views

Disagreement in Strategic Bargaining

Construct a pair of startegies for the ultimatum game ($T=1$ bargaining game), that constitutes a Nash Equilibrium and together support the outcome that there is no agreement reached by the two ...
2
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2answers
64 views

Matchstick Game

Consider the following $2$ player finite extensive game. Player $1$ moves first. She must choose an integer from $1$ to $10$, and place that number of matchsticks on the table. Next, Player $2$ must ...
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0answers
39 views

Strategy sets and SPNE

I need to find the startegy sets for the two players in this game. I understand that the game has only one subgame, that is, the entire game. I cannot seem to understand the strategy sets of the ...
1
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1answer
59 views

features of Generalised Method of Moments estimation

[ What does it mean that GMM is robust to distributional assumptions?
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0answers
23 views

Linearisation of the IS curve?

How to the IS curve linearised around the structural equilibrium?, what is the math behind it?
1
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1answer
39 views

Nash Equilibria in Target Destroying-Guarding Game

Army A has a single plane which can strike one of three possible targets, A, B and C. Army B has one anti-aircraft gun that can be assigned to one of the three targets to guard it. The value of each ...
2
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2answers
154 views

Best Response Functions for Cournot

For a Cournot Duopoly game with Linear Demand functions, we need to find the optimal quantity of each firm such that profit is maximised. Given the linearity of the Demand curves, we will obtain a ...
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1answer
92 views

General Equilibrium Involving Production

I need a little conceptual clarification. For a standard $N*K*M$ general equilibrium model, would an allocation, say, $y^k$ be Pareto Optimal if it does not solve $max(py^k)$? I understand that the ...
1
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1answer
69 views

Majority Rule and Single Peakedness

Majority Rule will induce non empty choice set if individual preferences are single peaked Is this statement true? I have some trouble in understanding the meaning of 'single peakedness' in context ...
3
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1answer
126 views

Blocking Coalitions

For $n$ individuals, can a blocking coalition only be formed by at least $n/2$ individuals? For example, if there are 6 individuals, can less than 3 individuals form blocking coalitions?
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2answers
52 views

Yield To Maturity exact meaning

From investopedia: "YTM is the total return anticipated on a bond if the bond is held until it matures" I have also seen this interpretation used in other sources however this seems wrong to me. ...
3
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2answers
102 views

Is it right to derive social marginal benefit by adding individual prices instead of quantities?

I come across a lecture material on market functions and externalities that makes me quite confused. Here's the setup: Two stores are located next to each other. If one installs a camera system in ...
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1answer
219 views

Prove that $u$ is a utility function for $\succsim$

If X is finite, define this function $u : X \rightarrow \mathbb{R}$ by $u(x) = |\{z\in X:z \prec x \}|$. Prove that $u$ is a utility function for $\succsim$. Is it sufficient to prove that the ...
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2answers
95 views

Doubt about equivalence relation

In class I was taking notes about equivalence relations defined as: Given a generic relation $R$ on $X$, $xIy$ if both $xRy$ and $yRx$ Now, I don't really understand the following proposition: ...
2
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1answer
53 views

If $\succsim$ is transitive but irreflexive, then it is asymmetric, proof

If $\succsim$ is transitive but irreflexive, then it is asymmetric. this is my proof: Suppose $\succsim$ is not asymmetric, which means that for any $x,y \in X$ $x\succsim y \rightarrow y \succsim ...
3
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1answer
262 views

separable utility function and cross price effect

Suppose that consumer's utility function for three goods is separable, that is, $U(x_1, x_2, x_3) = f_1(x_1) + f_2(x_2) + f_3(x_3)$ ...(i) where $f_i$ is increasing and strictly concave, i=1,2,3. ...
2
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1answer
41 views

Prove that in presence of many goods, the law of DMRS implies that at least one good must be a net substitute for any other good

I've been reading a book where the author claims that "if there are two goods they are always net substitutes. Along an indifference curve an increase in price of good 2 leads to less of good 2 and ...
1
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1answer
74 views

Income gap in Ramsey model

Ramsey model with income tax Question: For this question you are required to setup a Ransey-Cass-Koopmans model economy with a Cobb-Douglas constant returns to scale production technology, with ...
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2answers
52 views

when a=0, would economy accumulate more physical capital? Why?

Utility function is $U(c_t,l_t)=(1-a)ln(c_t)+aln(l_t)$ $l_t$ is leasure time $c_t$ is consumption Production function is $y_t=k_t^e(1-l_t)^{1-e}$ $k_{t+1}=i_t+(1-\delta )k_t$ where k is ...
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0answers
91 views

Signaling questions (separating equilibrium)

Consider two firms Inverse functions: $p(q)=max\{a-q,0\} $ $q$ is total production and a is positive constant. This value of a takes two values ah=2 (high demand) and aL=1 (low demand). Their ...
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0answers
62 views

Maximization under two different states of the world [closed]

What I did is the following one but I am not sure at all: Any help will be appreciated. Thank you.
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1answer
326 views

Profit maximization and allocative efficiency result

I completely stuck to the last part of this exercise. I cannot understand how can I determine an allocative efficiency result. Any help will be appreciated. Thank you.
2
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1answer
220 views

Stackelberg setup

I am completely confused because I cannot find the leader's best response. I do not know if it is exactly the same as it was a Cournot game. What I did is: Any help will be appreciated a lot. Thank ...