Questions tagged [theory]

The tag has no usage guidance.

Filter by
Sorted by
Tagged with
1 vote
1 answer
50 views

How to force two utility functions representing the same preference to generate expected utility functions representing the same order on lotteries?

Let $i$ be an agent, and let $A=\{x,y,z\}$ be a set of three alternatives. Then, suppose that player $i$’s linear order (i.e., complete, transitive, antisymmetric and reflexive binary relation) on $A$,...
EoDmnFOr3q's user avatar
2 votes
1 answer
76 views

MWG Exercise 2.E.5

Exercise Suppose that $x(\mathbf{p},w)$ is a demand function which is homogeneous of degree one with respect to $w$ and satisfies Walras' law and homogeneity of degree zero. Suppose also that all the ...
Shenron's user avatar
  • 103
1 vote
1 answer
31 views

Spiraling decline in labour supply due to small initial wage decreases

I was asked the following by a student (I work in mathematics/complex systems, my student in econometrics): In econometric studies that measure the elasticity of labor supply and inform policymakers ...
apg's user avatar
  • 123
2 votes
1 answer
42 views

Mixed gambles and risk aversion

The 1997 Quarterly Journal of Economics (QJE) paper titled "The Effect of Myopia and Loss Aversion on Risk Taking: An Experimental Test" by Thaler, Tversky, Kahneman and Schwartz, says that ...
Ramandeep's user avatar
1 vote
0 answers
54 views

questions about basic supply and demand curve theory

I've been getting into mathematics for its own sake and finding the same type of math can be applied across various fields and diverse domains (physics, engineering, data science, ecology, economics, ...
lddovgex's user avatar
0 votes
1 answer
27 views

Goods for resale are considered as producer goods?

I was looking for the definition of producer goods and this was the first result producer goods, also called intermediate goods, in economics, goods manufactured and used in further manufacturing, ...
GrandeKnight's user avatar
0 votes
1 answer
31 views

Can FOSD-transitivity replace the transitivity in utility representation theorem?

Let $\succsim$ be a complete, non transitivity preference relation. I wonder if FOSD-transitivity implies transitivity. The primitive is the space of lotteries $p_1,p_2,p_3,...$. We say the preference ...
High GPA's user avatar
  • 1,906
0 votes
1 answer
29 views

Is my understanding of Arrow's dictatorship correct? The dictator is free to update her preference and the social choice will always follow her taste

Suppose $R$ is a social ordering, $f$ is the social choice function, and $R_i$ is an individual preference. A profile of individual preference is $<R_i>$. $f(<R_i>)=R$ Suppose $i=1$ is ...
dodo's user avatar
  • 261
0 votes
0 answers
15 views

How could a market be designed to prevent hoarding?

Imagine that someone has been put in charge of creating a new market for some kind of commodity. They have ultimate regulatory power. What kind of market mechanisms could they put in place to ...
Crashworks's user avatar
0 votes
0 answers
41 views

Water Economic Metaphor - Evaporation / Condensation

I was considering economics, and how a lot of economics tends to use a water metaphor as a descriptive mechanism. Ex: market liquidity, "investment evaporated", "market flows around ...
G. Putnam's user avatar
  • 101
0 votes
0 answers
12 views

Design of a money skew economy (target: museums/libraries loan rotation sharing)

I was thinking about libraries and museums, and began wondering how such institutions might institute what I would describe as a "money skew economy." Skew in the math sense, of two lines ...
G. Putnam's user avatar
  • 101
0 votes
2 answers
53 views

Debreu's ordinal representation theorem is unique up to a positive monotonic transformation, what is the source?

In Debreu's 1954 ordinal utility representation theorem, the utility is unique up to a positive monotonic transformation. While the uniqueness result is well-known, I fail to find a proper reference. ...
dodo's user avatar
  • 261
3 votes
1 answer
55 views

$H$ is a constant? Maximizing: $\int _0^Te^{-t}f(x,u)dt$ st $x_t=g(t,x,u)$ and $g$ is independent of $t$

$\max_{x(t),u(t)}\int _0^Te^{-t}f(x(t),u(t))dt$, st derivative $x_t=g(t,x(t),u(t))$. Prove that $H$ is constant. My try2: consider the Hamiltonian $$ H(x(t), u(t)) = e^{-t}f(x(t), u(t)) + \lambda(t) g(...
dodo's user avatar
  • 261
1 vote
1 answer
45 views

Give bundles $x,y\in \mathbb R^n$, there must exist a budget $B\supset\{x,y\}$ and a demand $D(B)\in[x,y]$?

For a problem in revealed preference. Give bundles $x,y\in \mathbb R^n$, must there exist a budget $B\supset\{x,y\}$ and a demand $D(B)\in[x,y]$? Intuitively, this mean that we have two bundles, and ...
dodo's user avatar
  • 261
3 votes
0 answers
62 views

In Debreu's representation theorem of ordinal utility, is the assumption of "second countability" necessary?

Debreu's representation theorems Debreu 1959 states that: second countability, continuity, and weak ordering sufficiently implies the existence of real (continuous) utility function. The second and ...
High GPA's user avatar
  • 1,906
2 votes
1 answer
92 views

Two step Generalized Method of Moments (Newey 1994). $\hat{W}$ matrix depending on the nuisance parameter

Suppose that I am working in a model containing a nuisance parameter $h$ and a finite dimensional parameter of interest $\theta$, whose true values are $h_0$ and $\theta_0$, respectively. Newey (1994) ...
mich95's user avatar
  • 131
3 votes
0 answers
101 views

Generalization of Debreu's additive utility function $\sum_nu_n(x_n)$ with infinite number of commodities

I want to generalize: $\sum_nu_n(x_n)$. Here $x_1,x_2,..,x_n,...$ are commodities. There are infinite number of commodities: $n\in\mathbb N$ or $n\in \mathbb R_+$ The following not a candidate: $\...
High GPA's user avatar
  • 1,906
1 vote
1 answer
43 views

Reference for monotonicity: $x\geq y\implies x\succsim y$ and $x>y\implies x\succ y$

I've seen this definition for monotonicity many times on different papers and on this site: $x\geq y\implies x\succsim y$ and $x>>y\implies x\succ y$. However, what I read on MWG's ...
High GPA's user avatar
  • 1,906
4 votes
1 answer
165 views

Inductive proofs in economics

Are there any thorems in economics which use proof by mathematical induction to prove them? I've noticed that there is nothing (to my knowledge) from a standard PhD microeconomic theory sequence which ...
EconJohn's user avatar
  • 8,305
1 vote
1 answer
161 views

Approximate Pareto efficiency with ordinal preferences

Pareto-efficiency is a very important property, but in some cases it cannot be attained (for example, when agents play a game such as the Prisonner's Dilemma). In such cases, it can be useful to ...
Erel Segal-Halevi's user avatar
0 votes
0 answers
14 views

Knitting empirical results in development economics together

Development Economics, to my knowledge, has become a mostly empirical field, with RCTs and other quasi-experimental techniques yielding a huge body of empirical knowledge about specific policies and ...
Ishan Kashyap Hazarika's user avatar
3 votes
0 answers
33 views

Screening models with multiple goods and interacting costs

I'm looking for a reference in the literature on monopolistic screening/mechanism design, where there are multiple allocative variables and these interact in the agent's utility function. For example, ...
econ1324's user avatar
0 votes
0 answers
17 views

Why is my growth rate changing after changing base year for inflation?

I had the following problem: a client of mine calculated income growth rates using 2017 as base year for inflation, except for the 2015-2020 growth indicator, where they used 2020 as base year. Wanted ...
Juan C's user avatar
  • 101
1 vote
1 answer
30 views

Factor changes in Melitz (2003) model

What would be the effect of changes in factor supplies, for example labor, on the open economy equilibrium?
Papayapap's user avatar
  • 1,843
6 votes
1 answer
147 views

Does the Rybczynski theorem also hold in modern trade theory models?

Does the Rybczynski theorem also hold for modern Melitz (2003) type trade models?
Papayapap's user avatar
  • 1,843
2 votes
0 answers
51 views

Time series question from book (ma)

I'm trying to understand this subject and I'm stuck in a question found in a book. I understand white noise characterization, but I'm having some problems with this... maybe it's too much theory? I ...
Blipo's user avatar
  • 21
2 votes
0 answers
87 views

Questions regarding Solving Melitz (2003) model

I am editing my question regarding solving the model in order to be more specific. Regarding the demand side, In the beginning of the model, we have a CES utility function over a continuum of goods ...
zmhs's user avatar
  • 21
1 vote
1 answer
100 views

Pareto optimal allocations with uncountably many agents

Consider an economy with some $n$ agents with continuous utility functions $u_1,\ldots,u_n$. It is easy to prove that a Pareto-optimal allocation exists: define the welfare of an allocation $x$ as: $W(...
Erel Segal-Halevi's user avatar
0 votes
1 answer
55 views

Is there a theory in economics about how companies have to withhold surplus goods or services for strategic reasons, creating artificial scarcity? [closed]

I have been thinking about how hotels and hostels have available rooms / beds, but they don’t give them away for free or a heavily discounted price; or how grocery stores and restaurants throw out ...
D J Sims's user avatar
0 votes
0 answers
58 views

Non Continuous Walrasian Demand Function

I have a silly question. I’m trying to solve some exercises that have to do with the walrasian demand function $x(p,w)$ and excess demand function $z$. More especifically, I’m asked to show that there ...
Martin 's user avatar
0 votes
0 answers
27 views

Forgetting name of influential paper on evolution applied to corporations

There is a paper that I would like to cite because I remember what it said except that I am forgetting who wrote it and what its title was. Basically people were skeptical that corporations could ...
user84614's user avatar
1 vote
1 answer
25 views

Name of concept where having someone negotiate on your behalf gives you an advantage?

I had a discussion with an Amazon customer service rep yesterday. I asked for something, and they replied "we cannot do that". Amazon was, of course, perfectly capable of doing what I asked. ...
ccleve's user avatar
  • 111
5 votes
2 answers
209 views

Language of theoretical economic papers

Could anyone explain, or provide a good source to, the language used in theoretical economic papers? For example, the difference between an assumption, proposition, postulation, theorem, lemma, axiom,...
Eli J's user avatar
  • 409
2 votes
0 answers
27 views

What social aggregators are complete?

I am reading Eliaz (2004) for a general treatment of social-choice impossibilities. I am confused by the fact that it seems that we should get completeness even in situations where we should not have ...
raving-bandit's user avatar
1 vote
0 answers
74 views

Can the topological assumption in Debreu's representation theorem of cardinal utility be altered from "connected separable" to "second countable"?

Theorem (Debreu 1959 page 9, 10) Let $X$ be connected separable topological space endowed with product topology. If $\succsim$ is independent and at least three factors are essential, then there exist ...
High GPA's user avatar
  • 1,906
3 votes
4 answers
224 views

What does omitting capital from production function assume about capital?

We have two production functions, one $F(L)$ with labor as only factor of production, the other also includes capital $F(L,K)$. What do we assume about capital in the first case when we omit it from ...
Papayapap's user avatar
  • 1,843
4 votes
1 answer
272 views

Does Debreu's representation theorem of ordinal utility require Hausdorff topology?

By Debreu's theorem of ordinal utility, any continuous weak order on $X$ is represented with a continuous utility function, if $X$ is a second countable or connected separable topological space. My ...
High GPA's user avatar
  • 1,906
5 votes
1 answer
192 views

Looking for a paper on game theory as a beautiful thing, not needing immediate purpose

I am looking for a paper I am sure to have read a while ago, but cannot recall its title. The message was that we should not judge game theory (or economic theory in general?) by its ability as an &...
Bernd's user avatar
  • 151
3 votes
1 answer
175 views

Does continuous preference imply upper-hemi continuous demand correspondence?

Let alternative $x,y,z\in R^N$. $\succsim$ is convex, rational, monotonic, and continuous. Let $B=[y,z]$ be a budget segment. Let demand correspondence be $D[y,z]=\{x\in B||x\succsim B\}$ $D[y,z]$ is ...
High GPA's user avatar
  • 1,906
3 votes
0 answers
86 views

How did econometricians justify the use of $EU$ instead of $EU^2$?

Consider the following two utility functions: $EU(p)=\sum_i u_ip_i$ $EU^2(p)=(\sum_i u_ip_i)^2$. In preference theory, $EU$ and $EU^2$ are equivalent because they represent the same preference. A ...
dodo's user avatar
  • 261
4 votes
2 answers
91 views

Any good resources on Information Economics Theory?

I am coming from a political economy/public choice perspective, trying to explore some ideas in signaling, especially the supply-side analysis of information transmission by the media/news. Although I ...
Mwazr A's user avatar
  • 63
1 vote
2 answers
137 views

How useful is the Fisher equation of exchange?

What empirical value does the Fisher equation of exchange MP=PV have given that the velocity of money, V, is measured as PY/M i.e. nominal GDP divided some preferred monetary aggregate? Surely there ...
Cola's user avatar
  • 335
3 votes
1 answer
83 views

For any small perturbation dx, utility cannot change, or else, x* would not be optimal

I am having trouble understanding something that Varian says in "Microeconomic Analysis: Third Edition." For those of you who have the book handy, the question that I have regards something ...
Mistah White's user avatar
1 vote
1 answer
101 views

Salop (1979) model for labor markets

Can the Salop (1979) model also be applied to labor markets or is there any reason why it should not be?
Papayapap's user avatar
  • 1,843
1 vote
1 answer
110 views

Does x ≽ y imply x > y or x ~ y in preferences?

Mas Collel Micro Theory question: Suppose that X is a set. Let ≽ be a binary preference on X. And ~ represents indifference defined from ≽. If ≽ satisfy completeness, is it okay to assume that: x ≽ y ...
Wizard74's user avatar
0 votes
0 answers
36 views

Sum of LS-LMSR probabilities is greater than 1

I am trying to implement LS-LMSR in a prediction market with binary outcomes: YES and NO. I am implementing this formula as the cost: ...
JJT's user avatar
  • 101
1 vote
0 answers
32 views

Theoretical basis of consumer confidence

I have read several papers on the formation of consumer confidence, how it is measured and also its role in predicting economic outcomes empirically. But I haven't come across any theoretical model of ...
Ishan Kashyap Hazarika's user avatar
10 votes
7 answers
6k views

Why does economics escape Godel's theorems?

I've seen many professors say that Godel's incompleteness theorems don't apply to economics. Of course I've seen others like Yanis Varoufakis who has on record said that many economics papers defy the ...
Guest's user avatar
  • 149
-1 votes
1 answer
32 views

Interaction of redistributive taxes, monetary policy and the growth rate

While studying macroeconomics, interaction with taxes are not seen to importantly. I am though interested in an interaction with redistributive taxes (such as the income or the inheritance tax rate), ...
Nikolai Kl's user avatar
0 votes
2 answers
123 views

Curiousity the validity of an example of normative, positive and consumer surplus?

Following up a pretty long but very informative discussion with 1muflon1, I want to expand and merge with consumer surplus to have a big picture. In research of Dasgupta, 2019 about that after ...
Phil Nguyen's user avatar
  • 1,110