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25 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 ...
4
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1answer
55 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
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0answers
33 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
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1answer
57 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 ...
4
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1answer
71 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. GARP: if $a$ is indirectly revealed preferred to $b$, ...
4
votes
1answer
162 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.
1
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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 ...
1
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1answer
45 views

Calculating Market Concentration without sales data

I want to calculate market concentration (HHI and C4) but I don't have sales data. Is it accurate to use the share of establishments of each firm as a proxy for market power? Could you list some ...
1
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0answers
39 views

proof verification in George J. Mailath and Andrew Postlewaite (2001b)

I am reading George J. Mailath and Andrew Postlewaite (2001), and this is the lemma 1 in this paper. I don't understand the induction process in this proof. I think that we should use the fact that $...
2
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1answer
79 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} ...
2
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2answers
39 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^\...
4
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0answers
60 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
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3answers
626 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
105 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 ...
1
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0answers
160 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, ...
2
votes
2answers
867 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
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1answer
369 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 ...
1
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1answer
259 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 ...
1
vote
1answer
27 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
257 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 ...
2
votes
1answer
167 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
194 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 ...
2
votes
1answer
396 views

Intuition behind the linkage principle

An important result in auction theory is Milgrom & Weber's linkage principle, which, roughly, holds that the expected revenue from an auction is higher is the seller commits ex ante to reveal as ...
8
votes
2answers
931 views

When can one safely talk about decreasing marginal utility?

One thing I hear a lot is talk of decreasing marginal utility—the idea being that additional units of a good become progressively less attractive the more units of that good one has already. However, ...
11
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3answers
331 views

What are the recent advancements in building a unified theory of bounded rationality?

It seems that bounded rationality models focus on explaining a particular psychological bias, in a very specific way. In particular, its seems that the state of the art consensus is that one size does ...