Questions tagged [theory]
The theory tag has no usage guidance.
3
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3answers
68 views
Can measures of “efficiency” be objective?
So I've noticed the reliance on the term "efficiency" on some cases of economic practice. But I've also recognized problems, e.g. problems of abstraction or problems of pseudo-objectivity, related to ...
2
votes
2answers
64 views
What are “the fundamental categories of economics”?
I had an introductory class in marketing last week, and the professor wanted to test our previous knowledge of economics (we are juniors).
He asked us this simple question: "What are the fundamental/...
2
votes
1answer
68 views
need help from theorists: proof in Cole, Mailath, and Postlewaite (2001)
I have one question in the proof for section 4.1. in Cole, Mailath, and Postlewaite (2001).
$$\lim_{\varepsilon \to 0}\frac{1}{2\varepsilon}\int_{\overline{l}-\varepsilon}^{\overline{l}+\varepsilon} ...
0
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0answers
63 views
Expected utility theory
I allow myself to write to you today, being stuck on a problem related to the Expected utility function properties.
The problem is the following:
A) Let X be a finite set. Suppose >~ is a binary ...
2
votes
0answers
36 views
Afriat's number
I discovered the Afriat's theorem on the possible rationalization of a given data set of demand observations and would like to ask for your help in understanding how to compute Afriat numbers in ...
0
votes
2answers
36 views
Rationale for discounting
I am interested in understanding the rationale behind discounting in the context of government policy appraisal.
As far as I understand it, there are three main components to the discount values ...
1
vote
1answer
42 views
When can one read the general theory of employment,interest and money?
I am a first-year undergrad econ student and was interested in reading Keynes' book. in the preface, Keynes pointed out that the text deals in the abstract and is meant for his fellow economists. ...
2
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0answers
39 views
Open Foundational Problems in Mathematical Economics
What are some open problems in mathematical economics which are treated as if they have been solved in economics papers?
As an example, one of my teachers has previously pointed out to me that there ...
0
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2answers
49 views
When does an economic theory become true?
When does an economic theory become true?
When does it satisfy requirements for true knowledge, e.g. similar to those in empirical sciences?
1
vote
1answer
41 views
Post Brexit Referendum employment theory
According to Chuka Umunna, Labour MP for Streatham and prominent pro-EU campaigner:
People were told: "if immigration levels fall, it will be easier to
get a job, and easier to get a job that's ...
3
votes
0answers
37 views
Is there a theoretical basis for any popular income- or wealth-distribution model?
When modelling income or wealth, we probably want a continuous distribution with a lower bound; statisticians have named many, but Pareto and log-normal distributions have been among the most ...
-1
votes
2answers
41 views
A unique global currency and a balanced macroeconomic system
During my last trip, I traveled in Bolivia for two months, and I was struck seeing how life was cheap there, from a European point of view. I believe that is the same in the great majority of the "...
2
votes
2answers
33 views
understanding the proof of stochastic dominance.
$\int_a^b u(x)dF(x)$ (1)$ = u(t)F(t)|_a^b - \int_a^b F(t)u^\prime(t)dt$ (2)$ = u(b)-\int_a^b F(t)u^\prime(t)dt$
$= u(b)-(\Phi(t)u^\prime(t)|_a^b-\int_a^b \Phi(t)u^{\prime\prime}(t)dt=u(b)-\Phi(b)u^\...
2
votes
0answers
33 views
Market efficiency in software, music, news, etc
I'm not an ecomonist, but have been tossing around some ideas in my head for a long time and thought I might ask here what resources or existing work might be out there.
There are a lot of market ...
6
votes
4answers
511 views
Can the stock market grow faster than GDP indefinitely?
My understanding of conventional wisdom is that average long-term growth of advanced economies is expected to be significantly lower than the average long-term growth of the value of the largest firms ...
5
votes
0answers
40 views
Homothetic preferences [duplicate]
I want to prove that if a utility function that represents $\succsim$ has constant marginal elasticity of substitution (MRS) in proportional expansions along rays, that is:
$$
MRS(x,y) = MRS(\alpha x, ...
7
votes
3answers
387 views
Are there any instances where short run demand/supply is more elastic than long run cases?
Conventionally both demand and supply for goods and services are both more elastic in the long run than in the short run.
My Question
Is there ever an instance where demand and/or supply for a ...
0
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1answer
45 views
Is there any good textbook for theoretical economics mathematical modelling? [duplicate]
I am currently reading some theoretical economics books and, of course, many mathematical expressions appear. I kind of guess their meaning, but it takes a lot of time and, after all, my guesses are ...
1
vote
0answers
50 views
Consequences of a positive uncovered interest rate parity (UIP) spread for an emerging market economy
Empirically we observe that the uncovered interest rate parity (UIP) does not hold; in fact the exchange rate adjusted return on an emerging market bond is higher than the return on US bonds; I know ...
0
votes
3answers
101 views
Looking for a term that explains market participants that lie about their participation to gain access to said market
I'm Looking for a term that explains the behavior of a market participants that will lie or exaggerate how much or what they offer in order to gain access to a market that would otherwise be ...
0
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1answer
54 views
Leontief utility with producer goods
This question may require some explanation. Also, I'm way out of my depths so please let me know if this question is misguided.
The standard Leontief utility seems to assume the goods are consumed in ...
3
votes
1answer
30 views
Type of good that can be owned but not consumed when used
I'm an econ noob so apologizes if this is a dumb question.
I'm trying to find if there is categorization of a good that can be owned but is not consumed when used. Tools are an example of this. A ...
2
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0answers
71 views
Money in New Keynesian models
I have been doing some reading on general equilibrium theory and it has made me highly confused regarding the logic behind NK models. If I have understood correctly, NK models are based on Walrasian ...
3
votes
1answer
55 views
Does the existence of insurance markets negate the broken window fallacy?
In the wake Harvey and Irma, I did some reading on the Broken window fallacy. It makes sense on it's face that after paying the glazier for the broken window, the shopkeep could not spend his six ...
1
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0answers
132 views
Most important but untested theories in economics? [closed]
In the opinion of the economists here, what are some of the more important theories in economics that remain untested? By untested I mean theories that, though perhaps evaluated using empirical data, ...
0
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0answers
47 views
Is there a branch of economics exploring the more or less “natural science” oriented approach?
Even given that economics deals with very complex sociological dynamics, today very advanced tools are available for simulations and reality analysis.
Similarly, at least parts of psychology can be ...
1
vote
2answers
43 views
Gresham's Law applied to wampum and gold/silver coins in the 1600s
So I was reading an article by Nick Szabo called "Shelling Out"
And in his introduction paragraph he explains how American Indians use bones and shells as a currency called "wampum".
This currency ...
2
votes
0answers
234 views
How to self-study graduate level macroeconomics? Is there even a point?
As I had hoped to learn enough macroeconomic theory to get some research ideas, my goal at the beginning of this summer was to read through and complete the problems in an introductory advanced ...
2
votes
1answer
142 views
What is the correct economic term for beneficial “transaction frequency”?
I am not an economist but I am trying to track down and understand an economic principal (and/or theory) that I think is called "transaction frequency" but when I go searching on that term I find only ...
2
votes
2answers
487 views
Monopoly and Taxes (Nicholson Exercise)
Hello I'm working through Microeconomic Theory : Basic Principles and Extensions of Nicholson and Snyder 10e, for an exam and I fail to get how to answer this question (p.517) :
A specific tax is a ...
1
vote
1answer
127 views
Difference between LMSR and Liquidity-Sensitive LMSR
What is the difference between the LMSR (logarithmic market scoring rule) and the Liquidity-Sensitive LMSR (LS-LMSR) and what would cause prediction markets like Augur to focus on the later model?
4
votes
2answers
228 views
Do contemporary Marxist economists still deny the utility/value theory which underpins classical economics?
Do contemporary Marxist economists still apply the labor theory of value when analysing economic phenomena? Or do they e.g. acknowledge that value (and utility) is subjective as is common knowledge in ...
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1answer
277 views
What consumer preferences exhaust the budget?
Suppose that a consumer has a complete and transitive preference relation over R+. Further suppose that the consumer faces prices p = (p1,p2,...,p) 0 and has ...
3
votes
2answers
62 views
Economic Confirmation Biases
I'm not sure if this is the right place to post this, since my question is a bit more general to all of social sciences (indeed sciences in general), but I figured since Economics is a social science ...
3
votes
2answers
130 views
How to theoretically explain an exponential income distribution?
I have been working on income distributions for a while, and I've been asked to do a theoretical justification for the idea that income distribution follows an exponential function for low incomes. ...
7
votes
3answers
528 views
Core elements of Marxist Economics
I am interested in understanding the differences between mainstream economics and marxist economics. For that, a guide about what is central to the marxist economic theory (not political or cultural ...
0
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2answers
80 views
Are there strains of economics that are “no (political) economics”? [closed]
To support my belief in the arbitrariness of economic theory and thought, since different economic systems have their own rules, theories etc., which contradict the rules of other systems and which ...
1
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1answer
174 views
Transforming expected utility functions
I am using the following theorem:
To better understand how I can transform expected utility functions.
An example with which to work:
I want to show that the preferences represented here satisfy ...
2
votes
3answers
771 views
Jokes in Economics; Challenging Assumptions in the Dismal Science [closed]
We've delved into questions about the history of economics. We've pondered what the most important equations in economics are. But in every science, academic culture inevitably forms a special set of ...
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0answers
31 views
Limits of utilitarianism?
In all of economics that I know, people maximize their Utility $U_i=f(x_1,...,x_n)$, and therefore make some kind of cost-benefit analysis.
One obvious criticism to this model is that we often do not ...
1
vote
1answer
23 views
Static wage posting model and indifference to wage levels
Suppose a monopsonistic firm has the following simple profit function:
$$\pi (w) = PL(w) - wL(w) $$
where $L(w)$ is the labor supply, $P$ is the constant output price, and it has a linear production ...
1
vote
1answer
49 views
Theories relevent to institutional quality and economic development [closed]
I want to write a term paper on institutional quality and economic development. what will be its possible theoretical framework?
1
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1answer
208 views
On closedness: commodity space
In Intriligator (2002, p. 143) we find the following statement:
\begin{align}
C = \{(x_1,x_2,\ldots,x_n) : x_j \geq 0,~j=1,2,\ldots,n\} \subset [0,\infty)^n
\end{align}
Thus commodity space ...
4
votes
1answer
36 views
Prediction market based on LMSR: Sell, or buy other side?
Consider a prediction market with two outcomes (Yes and No) and a scoring rule based on Hansons’s LMSR, i.e. ln(ea+eb), where a and b are the number of Yes resp. No shares sold.
Assume that I have ...
1
vote
1answer
142 views
Have any economists ever argued that the notion of opportunity cost should be done away with?
I hold the opinion that the notion of opportunity cost "muddies the intellectual waters" so to speak, and I'd like to know if any professional economists have expressed this sentiment, or similar.
...
2
votes
1answer
158 views
Any information on a toy economy with 3 types of agents in it
I was thinking about a theoretical economy where there are 3 types of roles for the agents. They can be :
workers : produce good A
criminals : steal good A
cops : protects good A
without going into ...
5
votes
1answer
190 views
What term/theory describes more efficient utilization of a resource?
I may be asking the wrong question here, but I wonder if there is a term/theory that describes/studies the evolution of an economy that continually improves the utilization and allocation of certain ...
1
vote
1answer
303 views
How is signaling theory different from cue utilization theory?
I think they are quite similar. I am a bit confused. Can anyone explain this to me?
I got the name and the information about the cue utilitarian theory from a journal article that related to organic ...
1
vote
1answer
100 views
Will the goods market be in equilbrium along the AD curve?
This is a question which was asked in the entrance to Jawaharlal Nehru University's (New Delhi) entrance for their post-grad program specializing in International Economics in 2014.
Which of the ...
5
votes
2answers
168 views
Why the total value of the whole economy is constantly appreciating?
Take S&P for example. In the long run it just keeps climbing. Same for the market as a whole. Why would this happen? Why the market keeps going up (in the long term) all the time?
(source)
