# Tag Info

44

Most theorems in economics would satisfy the consensus requirement. However, depending on what you consider to be common sense, different results will qualify. The following are two results that I found sufficiently hard to believe when I first encountered them. The revenue equivalence theorem, which, according to Wikipedia, implies that any single-...

29

Theoretical Economics (TE) and Quantitative Economics are two open access, peer reviewed journals. The former I know is of very good quality, arguably the top "field journal" in microeconomic theory.

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In an open economy, the balance of payments current account equals net saving. This is often represented as: $$S - I = X - M$$ where $S$ is saving, $I$ is investment, $X$ is exports and $M$ is imports. That is admittedly a slight over-simplification as current account includes not only exports and imports of goods and services but also other items such as ...

23

The Giffen Paradox - increasing prices can lead to higher demand even if the goods are considered inferior. General consensus is increasing prices lead to less demand - if it's more expensive, people will buy less. In some cases, increasing the price will make consumers perceive a good to be of higher quality, or more desirable, thereby increasing demand. (...

22

The fact that the burden of a tax on sellers can by borne by buyers, and vice versa. More generally, the fact that true tax incidence is largely or completely unrelated to who is nominally being taxed (e.g. taxes on yacht purchases can in principle hurt the poor more than the rich, etc.). The fact that in a perfectly competitive market with free entry and ...

17

The American Economic Association's Journal of Economic Perspectives can be accessed free of charge. It is definitely a reputable outlet (articles are mainly solicited from top economists), although it tends to publish original syntheses rather than primary research.

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Check out sunk cost. Although this might seem completely counterintuitive, the investment you have made should be irrelevant to your decision to stay or quit, if this investment has already been made and cannot be recovered. What matters is whether the benefits you are yet to incur outweigh the costs (that you are yet to incur). So the decision should be a ...

15

Best price clauses and, to a lesser extent, price-matching guarantees have been the subject of intense regulatory activity in recent years. Here's a fact that is surprising to many, despite there being a significant consensus in the economics profession: Best price clauses and price-matching guarantees can harm competition and consumers A best price ...

14

Sending costly signals may work, at least when the recipient is less attractive than the sender. There's also a nice popular science book by Paul Oyer called Everything I Ever Needed to Know About Economics I Learned from Online Dating that covers some of this ground, including the paper linked above. Another theoretical paper suggests that costly signals ...

14

This is called the Alchian–Allen effect. The Alchian–Allen effect was described in 1964 by Armen Alchian and William R Allen in the book University Economics (now called Exchange and Production). It states that when the prices of two substitute goods, such as high and low grades of the same product, are both increased by a fixed per-unit amount ...

13

Your formula $\mu = \sum\limits_{i=0}^n x_i$ just denotes the total amount of goods, so this just means that $\mu$ units were distributed among $n$ agents. Scarcity (in this context) means that no matter how you distribute these $\mu$ units, as long as everything else is unchanged (ceteris paribus) at least one agent would like to get more, i.e. $\forall (... 12 A relevant literature seems to be that on optimal stopping problems. There is a fairly technical Wikipedia article here and here's a book chapter. In economics, such models have been used to think about how sellers learn about selling opportunities, investment in R&D, and optimal labor search strategies. 11 Advanced Macroeconomics by David Romer, now in its fourth edition. Link contains TOC and a sample chapter. The presentation consists of formal theory models, but with lots of intuition too, followed by light empirical applications. 11 You should also try Advanced Microeconomic Theory (3rd Edition) by (Jehle, Reny, 2011). Note that, imho, Mas-colell-Whinston-Green (1995!) is the best choice for those with initial background in Math switching to Economics. When it comes to Economics majors the former seems to be more appropriate (and more modern). For modern Macro with strong math see ... 11 A partial answer: convex analysis is extensively used in axiomatic decision theory, at least in its recent developments. Most of these papers focus on individual behavior. You can have a look for instance at the following papers on ambiguity-averse preferences: "Maxmin Expected Utility with Non-Unique Prior" (Gilboa & Schmeidler) "Ambiguity Aversion, ... 11 I guess you might already know this, but I wanted to add a little detail to the other answers for the sake of any layman who comes here and gets the wrong end of the stick. What is meant by rationality? It is important to begin by saying that when economics use the term rational they have in mind a fairly precise definition that does not perfectly coincide ... 11 Lowering income tax rates can in some circumstances increase revenue. A simplistic view would assume higher taxes = higher revenue, but it doesn’t account for the fact that different tax rates alter behavior. It becomes obvious when you look at the extreme end — with a 100% income tax rate, nobody would bother having a job, because they don’t get to keep ... 11 Price discrimination can make consumers better-off This can happen in a variety of ways. For example, suppose that 50% of consumers are 'loyal' to firm A and 50% loyal to firm B. A consumer is willing to pay$v$for one unit and incurs a switching cost$s\in(v/2,v)$if they buy from a firm other than the one to which they are loyal. Consumers buy from the ... 11 I’m going to toss my hat into the ring with the very notion of Opportunity Cost Who hasn’t argued with someone who “likes” A, which has an opportunity cost B, and have that person adamantly refuse to consider the loss of B as a cost for A or in any way relevant to the choice to get A? If you’ve ever tried to persist in such a situation, I’m sure you also ... 10 Firstly, for basic introductory econometrics, the following is quite good: "Introduction to Econometrics" by Stock and Watson. It is light on technical details, and heavy on intuition. This might not appeal to you if you are a math major, but it's the most important thing to get straight if you are interested in applying the empirical methods rather than ... 10 This result is indeed a version of Berge's maximum theorem. If there is a continuous function$u:M\times H\to\mathbb{R}$such that$x\preceq_e z$if and only if$u(e,x)\leq u(e,z)$, one can derive the result directly from Berge's maximum theorem. If$H$is locally compact, as it is the case if$H=\mathbb{R}^n\$, then such a function can always be found, this ...

10

Personally, for choice analysis, I like Discrete Choice Methods with Simulation by Ken Train (pdf) Applied Choice Analysis: A Primer by Hensher and Greene (2nd edition, book) Modeling Ordered Choices by Hensher and Greene (pdf) Regression Models for Categorical Dependent Variables Using Stata by Long and Freese (3rd edition, book) (1) is a fairly short, ...

10

McCloskey's Applied Theory of Price is somewhat legendary as a model of clarity. It is, sadly, no longer in print. However, a PDF is available here: http://www.deirdremccloskey.com/docs/price.pdf. The level of mathematical sophistication in this book (like in most good economics!) is not that high, but the book gives a deeper look at the important concepts ...

10

"The Benefits and Costs of Using Social Distancing to Flatten the Curve for COVID-19", Thunstrom et al. We examine the net benefits of social distancing to slow the spread of COVID-19 in the United States. Social distancing saves lives but imposes large costs on society due to reduced economic activity. We use epidemiological and economic forecasting to ...

9

Yes, there is such a setting. The result is that If each player's strategy space is convex compact and if payoffs are continuous then there exists at least one Nash equilibrium (possibly in mixed strategies). This holds even when the set of possible actions is uncountably infinite. If one additionally assumes that payoffs are ...

9

There's also Labor Economics by Pierre Cahuc, Stéphane Carcillo, and André Zylberberg. It's a broader labor econ book, but The "Unemployment and Inequality" fourth of the book covers these topics. I have not seen the second edition, but I expect that they did not alter that part for the worse.

9

The best introduction is, in my opinion, the book by Matthew Jackson. It has a pretty nice introduction (even if you know nothing about social networks) and chapters about many of the applications of graph theory in economics. Jackson, M. O. (2008). Social and economic networks (Vol. 3). Princeton: Princeton University Press. It sounds like you try to ...

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Most of the literature on "Strategic experimentation" (or Bandits) uses Poisson processes. Here players can use either a risky or safe arm and one of them generates a fixed stream of payoffs (usually the safe arm) the other one generates lump-sum payments whose arrival times are described by a Poisson process. Some examples are: Klein, Nicolas, and Sven ...

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Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January. I disagree with your assertion that EGT ...

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