Questions tagged [theory]
The theory tag has no usage guidance.
116
questions
0
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0answers
14 views
Alternative theories of money and financial markets? [closed]
what is the difference between post-keynesian and marxist theories? and why the alternative theories of money and financial markets exist?
1
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0answers
27 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 ...
7
votes
7answers
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 ...
-1
votes
1answer
30 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), ...
1
vote
2answers
113 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 ...
2
votes
1answer
113 views
Is there any overlap between Rawlsian approach and uncertainty avoidance?
From the definition of the Rawlsian approach
The Rawlsian approach to social welfare, built on the foundation of
the “veil of ignorance” (Rawls, 1999, p. 118)
where "veil of ignorance" is
...
1
vote
1answer
91 views
Is there any example to see the differences among Rawlsian ethics, Utilitarianism or (classical) liberalism ethics in policy economics?
From a decent answer and comment here of 1muflon1, I am motivated to know more about Rawlsian ethics, Utilitarianism, or (classical) liberalism ethics in policy economics. However, so far, I still not ...
0
votes
2answers
229 views
Why "positive theory" is important in discussions of how antitrust law achieve "normative goal"?
In this description regarding positive theory and normative theory, from what I understand, positive theory is based on fact and cannot be approved or disapproved (e.g., explain how the economy ...
3
votes
1answer
127 views
What is the difference between Impression Management and Signaling Theory?
I'm interested in theories on how organisations shape their stakeholders' (especially consumers' and investors') perceptions and decisions. I read about Impression Management and Signaling Theory. ...
6
votes
1answer
132 views
Effect of bounding action space on the set of equilibria
Suppose $N$ players play a game, where each player's action space is $[0,1]$.
Each player has an identical continuous utility function $u:[0,1]\times [0,1]^{N-1}\rightarrow\mathbb{R}$, where the first ...
1
vote
0answers
81 views
What is the "recursive moral hazard theory" of "trade credit"?
When reading a recently published paper, I saw the paragraph
We construct a sample of over 200,000 supply chains to conduct a
chain-based analysis of trade credit. Our study uncovers novel
stylized ...
4
votes
1answer
148 views
Krugman 1980 AER, Deriving Equation 14
I have been trying to derive equation 14 from Paul Krugman's 1980 AER paper. I keep getting a different result, and further, I find that equation 14 from the paper does not balance payments when I ...
1
vote
0answers
43 views
Definition of strictly convex preference
Let $x,y\in X$.
Does strictly convex preference (which implies that the utility is strictly quasiconcave) mean that:
$x\succsim y$ implies $\alpha x+(1-\alpha)y\succ y$ for any $\alpha\in (0,1)$?
3
votes
2answers
121 views
Convex rationalization when the budget sets are segments?
Backgroud:
SARP can be defined on general budget set.
SARP: Assume for all $B$ the choice $c(B)$ is only one element. If $x_i,x_{i+1}\in B_i$, and $x_i = c(B_i)$, for all $i\in \{1,N-1\}$, then $x_1=...
1
vote
0answers
23 views
Selection of functional form for utility function in theoretical model
I am starting to work on an IO model and I am puzzled in front of the choice of the appropriate utility function. Since the concept of utility is so abstract, and one cannot directly refer to ...
1
vote
1answer
73 views
Can I rename a utility function based on its properties?
A big name researcher gives a name to a specific utility function 30 years ago. Now I am writing a paper and feel that a new name might be more suited because of the properties associated with the ...
1
vote
1answer
94 views
Actions in economics
Mirowski 1989 argues economics and physics have frequently informed each other's theoretical development, and neoclassical economics has the same Lagrangian and Hamiltonian formalism frequently seen ...
4
votes
1answer
84 views
Lecture notes competitive labor market with minimum wage
Can somebody recommend lecture notes that derive competitive labour market model equilibrium with minimum wages? This has been surprisingly hard to find, because most lecture notes use minimum wages ...
5
votes
1answer
79 views
When can one drop time subscripts? Example from Angrist and Kugler (2003)
Not the first time I am asking myself, but in this paper they actually start with a time dependent maximisation problem and then drop all time subscripts.
Background: They have profit maximisation ...
0
votes
0answers
26 views
References on Cobb-Douglas Function
I am wondering why everybody uses Cobb-Douglas production functions? Nowadays they are so standard that they are just written down without further discussion. Does anybody know more about this and can ...
2
votes
0answers
20 views
Brücker et al. (2014) migrant labour supply shock
Brücker et al. (2014) write down a stylized model of wage-setting with a labour supply shock (migration), which I find hard to follow. Maybe somebody worked on it or is interested..
Labour force is ...
0
votes
0answers
38 views
Loosely speaking, are all modern economies 'Keynesian' in their stance on spending during downturns?
Keynesian economics is defined as:
increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression.
Do all modern economies adopt a Keynesian ...
0
votes
1answer
107 views
Intuition of Shephard's Lemma in Reverse
I am not sure how to word this question. I understand the envelop theorem pretty well and as a result Shepard's Lemma. The proof is relatively straightforward. I am getting stuck on the intuition ...
2
votes
2answers
163 views
Why should prices come down (in theory) in an educated society with a well-run government?
In Chapter 1 of Robert Kiyosaki's "Rich Dad, Poor Dad", the rich dad says: "In an educated society with a well-run government, prices should actually come down".
Is there any ...
1
vote
0answers
36 views
Identifiability of Non-Parametric Utility Function?
I recently learned that EU characterized by independence and weak ordering is identifiable, but a utility function like: $U(x)=v_1(x)v_2(x)$ is not identifiable.
Does it mean that "cardinal ...
5
votes
0answers
112 views
Certainty equivalence when the utility is semi-continuous instead of continuous
Let $U:\mathbb R^2\to\mathbb R$ be a utility function.
If $U$ is strictly increasing and continuous, then it is well known that for any $(x_1,x_2)$ there exists a certainty $(c,c)$ such that $$U(x_1,...
2
votes
1answer
324 views
Is it necessary to ask permission before including someone in the acknowledgements of a economic research paper?
Do I need permission to thank someone, even if I said “all mistakes are our own”?
Do I have to make sure that the person being thanked must read the paper, or, it is fine if he just discussed about ...
4
votes
0answers
72 views
Who were the first economists arguing that utility maximization is the core of rationality and economic behavior?
I am looking for the first economists arguing that maximizing utility function is the iff condition of rational behavior.
I've learned that neoclassical economics is founded on this argument. Is this ...
1
vote
1answer
85 views
What additional axiom to GARP do we need to generate a differentiable or smooth utility function
After researching for a while, I find this:
https://www.jstor.org/stable/1913607?seq=2#metadata_info_tab_contents
They come up with an axiom called SSARP that generates a preference with smooth demand ...
-2
votes
2answers
45 views
Famous recent paper on monetary Unions
do you know any (theoretical or empirical) recent famous paper about monetary unions ? I heard that topics like "monetary unions at ZLB" or "fiscal coordination during crisis time" ...
3
votes
0answers
59 views
Conditional distributions in model with continuum of agents
Many economic models consider a continuum of agents, $i \in [0,1]$. Suppose these agents have characteristics $(x_i, y_i)$, which are independently distributed. Are all possible values of $(x_i,y_i) \...
3
votes
3answers
58 views
Theoretical economy calculation of closed country
Is there any well-known theoretical solution to the problem as described below? I am considering an ideal very simplified case.
There is a closed country/community of N people. All people are working. ...
2
votes
1answer
58 views
Are there some examples of theoretical models that discuss pandemics?
I am looking for some papers/references that showcase theoretical economic models that incorporate pandemics. Most work seem to be purely empirical. Does anyone know of some papers that try to model ...
0
votes
1answer
69 views
Economics perspective of connected workers
According to the Deloitte report published here, a connected worker is defined as someone whose working life is changing due to digital and other technologies. This is due to advancement of ...
1
vote
1answer
49 views
Where can I find economics theories to learn about? [closed]
I'm a beginner to economics so I do not have much knowledge. However, I enjoy learning new economics theories. For now, I normally search for economics theories by looking at those that won nobel ...
12
votes
3answers
1k views
What is the point of all the models in an economics degree?
I am a student of Economics doing my masters degree and I have to say I am a bit tired of all the models.
On the one side, there is these models where I can see how they are derived, which always ...
0
votes
1answer
119 views
Continuity of preferences
Let $\succsim$ be a transitive and reflexive relation on a metric space $X$ with closed upper and lower contour sets. If $\succsim$ is not complete, does it hold that: for all converging sequences ...
1
vote
1answer
82 views
Prove that a preference is linear
Given the following two conditions:
$x\succ y$ implies $x+a\succsim y+a$,
And,
$x\prec y$ implies $x+a\precsim y+a$
We want to prove that $\succsim$ is a linear preference.
One of the ...
1
vote
1answer
97 views
When to use a lagrange multiplier?
I have a question in regards to the use of Lagrange multipliers in macro models.
I have seen that when writing a Lagrange there are two ways to write the Lagrange multiplier: 1) Indexed or 2) ...
1
vote
1answer
124 views
MWG Proposition 2.F.1
Is homogeneity of degree zero necessary in proposition 2.F.1?
It seems like the proof does not assume homogeneity of degree zero to establish the proposition.
If this is true, it seems that ...
1
vote
1answer
28 views
The notation cl co (A)
I stumbled upon this notation, (cl co(A+C), while reading "Set Optimization—A Rather Short Introduction" by Andreas H. Hamel, Frank Heyde, Andreas Löhne, Birgit Rudloff and Carola Schrage.
Is it ...
5
votes
1answer
492 views
How does expected utility theory treat losses?
I've been reading about prospect theory lately and have read often that prospect theory predicts people will be risk averse in gains and risk seeking in losses. This statement is typically ...
1
vote
0answers
46 views
Rotation of Quasilinear Utility
Let $u(x,y)=f(x)+y$ be a quasilinear utility. Now we rotate it by 45 degrees, (such that the $x-$axis becomes the direction of $(1,1)$)
$v(x,y)=f(x-y)+x+y$. Is $v$ also a quasilinear utility? What is ...
3
votes
1answer
74 views
Envelope Theorem in Hopkins and Kornienko (2010)
This is from Hopkins and Kornienko (2010). In this model, $x$ is investments, $s$ is status, and $y=z-x$ is leisure, where $z$ is endowments. $x(r)$ is the optimal investment, and the relative ...
6
votes
1answer
168 views
GARP and SARP assumed mononticity?
Monotonicity means the decision maker prefer more goods than less. It is not mentioned in textbook that SARP and GARP preasumed monotonicity, implicitly.
GARP: if $a$ is indirectly revealed preferred ...
3
votes
1answer
280 views
Is First Order Stochastic Dominance (FOSD) relation convex?
A convex relation is that $x\succeq y$ implies $\alpha x+(1-\alpha)y\succeq y$.
Let $>_{FOSD}$ be $\succ$, is the FOSD convex? Intuitively it seems convex.
3
votes
1answer
74 views
Understanding agents selecting among markets
Let's say an entrepreneur can choose between starting a business in a competitive market with zero economic profit, and starting a business in a market that is not perfectly competitive with positive ...
1
vote
1answer
72 views
Factor-augmenting technologies (Acemoglu and Restrepo 2018c)
In that paper, they consider the following production function:
$Y = F(A_KK,A_LL)$.
Where:
K denotes capital, L is labor, and $A_K$ and $A_L$ denote capital-augmenting
and labor-augmenting ...
1
vote
1answer
164 views
Why does socialism not work? [closed]
There are many arguments that socialism doesn't work. It's becoming an increasingly popular topic as congresspeople such as Bernie Sanders and Alexandria Ocasio-Cortez push for policies that are ...
1
vote
1answer
35 views
Implication of the concavity of u
Suppose that we have the following inequality:
$u( y- d) - u(y-d') \ge u(y' - d) - u( y' -d')$.
The concavity of $u$ together with $y\le y'$ then implies that $d \le d'$.
I sometimes come across this ...