Questions tagged [self-study]

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

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economy and consulting [closed]

I’ve finished my orientation year and I want to get into consulting after graduation. I’m majoring in electrical engineering. I read case in point.but when we solve cases, I see my friends ,they are ...
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1answer
33 views

Which countries have the comparative advantage in Ricardo's example?

I am a complete beginner here trying to learn through Khan Academy. I found some data that correspond to Ricardo's explanation of comparative advantage. According to Wikipedia "England has a ...
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24 views

Calculation of theoretical futures value

we form a stock index by using only two stocks in the index. One of the stocks is the Stock-A. The current selling price of the stock-A is 103 dollars and the second stock is the stock-B. The current ...
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14 views

How can I calculate returns for each three investment strategies?

Assume that the price of DF stock went from a price of $104 on March 2 to 146 on April 1. With a current stock price of 146, there is a call option available on the DF stock with an exercise price ...
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25 views

Production Possibility Frontier with 3 Goods

I want to make PPF Curve with 3 goods. Assumption : Economy that can produce three goods, Cloth $(C)$, Food $(F)$, Wine $(W)$. Two factors of production Capital $(K)$ and Labor $(L)$ So the ...
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1answer
23 views

Understanding distortions in investment in human capital

I am currently reading Economics of The Colour Bar by WH Hutt, and I'm having trouble understanding this bit he has written: “But when the price of any commodity is raised above the free market level, ...
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1answer
68 views

An overview of 4 books for an undergrad course in Mathematical Economics

I plan to self-study, at an undergraduate level, Mathematical Economics. There's 3 main topics to cover Introduction to economy science Microeconomy Macroeconomy (each of these have lots of sub-...
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15 views

Arbitrage checking (one step price tree)

I have a questions on arbitrage. These questions are from my lecture notes. And I don’t understand their some points. Ex1: there is a single step market as follows here, there are two securities ...
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1answer
37 views

Why does a firm in a perfectly competitive market not need to cover fixed costs in the short run?

While studying, I came across the solution that in some cases only the produces surplus, PS, needs to be positive, however not the profit, $\pi$. That means that if $PS \geq 0; p \geq AVC$, whereas, e....
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35 views

Economic interpretation of the given dynamic equations

How do you interpret these equations $$c_{t+1}/c_t=1-\beta [(c_t/w_t)-a]$$ $$w_{t+1}+c_t =kw_t+q$$ where $\beta$ a, k, q are strictly positive parameters. $c$ is consumption and $w$ is wealth. ——...
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1answer
85 views

Job search theory in discrete time

Let us assume that there is a labor who lives in discrete time universe and discounts future payoffs with the discount factor $b\in (0,1)$. And we assume that this labor is at period $t=0$ at first. ...
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1answer
46 views

Market impact function

I have the following Dynamical system for market impact function $$p_{t+1}-p_t=a(d_t-s_t)$$ $$s_{t+1}-s_t=bp_ts_t-cs_t$$ $$d_t=y-rp_t$$ where $s_t$ is quantity supplied, $d_t$ is quantity demanded, ...
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Behavioral Dictator Game

I am doing a self study on behavioral economics and I am trying to solve behavioral version of the dictator game with following utilities for person 1 and 2. $$ u_1( \sigma_1, \sigma_2 ) = \...
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34 views

Why decreasing co-state variable (over time) is Compulsory?

I have a short question. In the continuous time infinite horizon optimal control maximization problem Like $$\max \int^{\infty}_0 u(c_t)e^{-pt}dt$$ I use current hamiltonian function and I obtain ...
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1answer
49 views

Intertemporal budget constraint notion

Let $W$ denote the investor's wealth $B$ is the the investment in the risk free asset (suppose that the risk free rate is taken to be zero) and $X$ is the investment on the risky security which has ...
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62 views

Writing constraint

A firm accumulates useful knowledge $k$ by investing in R&D activities. Specifically, if the firm invests $r > 0$ dollars into R&D, the stock of useful knowledge grows by about $2\sqrt{r}$ ...
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55 views

Finding optimal path in continuous time

I have the following optimal control problem $$\max_{c_t,l_t} \int_0^{\infty} [ln(c_t)+\theta ln(1-l_t)]e^{-pt}dt$$ st. $$\dot{k_t}=k_t^{1/2}l_t^{1/2}-c_t-\beta l_t$$ $$k_0>0$$ I do big part of ...
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80 views

Bliss point hamiltonian function

I have the following utility function $$u(c_t)=g(c_t-b)^2$$ for constants $g,b>0$ Edited: in order to be bliss utility function, It must be g is negative. But in the question g is given to be ...
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1answer
28 views

Why do the gross return of wealth and wealth move in opposite direction?

I have a short question: Why does the gross return of wealth decrease as wealth increases? Why do the gross return of wealth and wealth move in opposite direction? $$R=1+(a/w^2)$$ where a is non-...
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3answers
143 views

Books friendly to self-studying Industrial Organization

I'm currently an undergraduate freshman looking for resources to self-read Industrial Organization. I've read Varian's undergraduate book cover-to-cover and have a decent understanding of basic game ...
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1answer
106 views

Study guide (and…) for “Intermediate Microeconomics with Calculus” by Varian

I have been googling study guides, solution manuals and other helpful material made by professors. But I have not found anything useful. Q: Do you guys know anything that will make the book easier ...
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2answers
211 views

Corner solution of the maximization problem

Answer Hello, I upload the actual question with my 8-pages answer. Please can you check it. Is there a corner dissolution for $c=\gamma$. Please share your ideas. Thanks.
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99 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
138 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
127 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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159 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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31 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
60 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
42 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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18 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 ...
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2answers
207 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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52 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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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
282 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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42 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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51 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 ...
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1answer
33 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
53 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
108 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 ...
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1answer
102 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
72 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 ...
3
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1answer
60 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
115 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 ...
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1answer
170 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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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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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 ...
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3answers
278 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 ...
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1answer
179 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 ...
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2answers
86 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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55 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 ...