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Results tagged with decision-theory
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user 108
the mathematical study of strategies for optimal decision-making between options involving different risks or expectations of gain or loss depending on the outcome.
3
votes
Accepted
Decision to make one side of a multisided platform the subsidy side
Yes. For example, in Armstrong (2006), a monopoly platform sets the price for side 1, $p_1$, such that
$$\frac{p_1-f_1+n_2\alpha_2}{p_1}=\frac{1}{\eta_1}$$
where $f_1$ is the unit cost on side 1, $n …
- 17k
11
votes
Accepted
Why stochastic dominance is "stochastic"?
In the below figure, CDF $F(\cdot)$ is first-order stochastically dominated by $G(\cdot)$. But $X_1$ and $X_2$ fall within the support of both distributions. So it would be possible to draw $X_1$ from …
- 17k
3
votes
What are different ways of specifying utility and decision making?
The traditional graduate micro theory education develops the neoclassic a model of consumer choice along the two parallel lines:
Observed choice based on the weak axiom of revealed preference.
The p …
- 17k