34
votes
Why does economics escape Godel's theorems?
The Incompleteness Theorems apply to computable, first-order, deductive systems. That means that there must be both a computable set of axioms and a computable inference system. In other words, you ...
- 456
20
votes
Why does economics escape Godel's theorems?
Every science using mathematical reasoning is in some sense subject to Goedel's first incompleteness Theorem, but in a rather trivial sense. This didn't diminish the success of, e.g., physics, and it ...
- 7,119
17
votes
Accepted
What is the point of all the models in an economics degree?
Models are more than just math. Model is a simplification of a reality that allows you to study the underlying mechanisms. Models do not need to be mathematical. Many people actually create models ...
- 57.7k
14
votes
Why does economics escape Godel's theorems?
Kurt Gödels Incompleteness Theorem is the negative answer to the quest of the mathematician Davild Hilbert in the early 20th century to find a set of complete and consistent axioms upon which to build ...
- 241
10
votes
Accepted
Can the stock market grow faster than GDP indefinitely?
There are trends that has allowed stock markets in advanced economies to grow faster than GDP for a long time:
Branching out abroad. This gives access to faster growing markets in developing ...
- 1,391
9
votes
Accepted
What is the difference between Impression Management and Signaling Theory?
I don't believe those two terms are used in the same spheres.
To me, an economic theorist, signaling plays a role in models with asymmetric information when the informed party moves first and the ...
- 5,291
8
votes
Accepted
Are there any instances where short run demand/supply is more elastic than long run cases?
It is possible. We normally think demand and supply are more elastic in the long run because consumers/firms have more options in the long run. For example if gas becomes more expensive consumers ...
- 453
8
votes
Core elements of Marxist Economics
From reading a selection of writings by Marx, I have come to understand the following three as the core elements of Marxian economics.
The labour theory of value. It asserts that the exchange value ...
- 983
8
votes
Accepted
Effect of bounding action space on the set of equilibria
Let $N=2$ and for $(x,y)$ and $(p,q)$ in $[0,1]^2$ let $d_{p,q}(x,y)$ be the Euclidean distance between $(p,q)$ and $(x,y)$, i.e. $d_{p,q}(x,y)=[(p-x)^2+(q-y)^2]^{1/2}$.
Choose $k>0$ such that $k&...
- 7,119
8
votes
Accepted
Language of theoretical economic papers
The language you refer to is the same in economics and in mathematics, for the simple reason that economics uses this language borrowed from mathematics, as it uses mathematics.
So, you have to look ...
- 4,122
7
votes
Accepted
Is First Order Stochastic Dominance (FOSD) relation convex?
The first order stochastic dominance relation is convex.
An easy way to prove this is to use the property that a cdf $F$ FOSD another cdf $G$ if and only if $F(x)\le G(x)$ for all $x$. That is, $F$ ...
- 15.8k
7
votes
Accepted
When can one drop time subscripts? Example from Angrist and Kugler (2003)
Because "adjustment costs are linear and there is no aggregate uncertainty", the FOC for $N_t$ is $$f'\theta g_N(N_{t}, I_{t}) - w_N = \phi \lambda C_N$$. Notice that this is exactly the ...
- 2,506
7
votes
Accepted
Does Debreu's representation theorem of ordinal utility require Hausdorff topology?
No. However, the problem can be reduced to representing preferences on a Hausdorff space. Instead of trying to represent a complete preorder on a set, one can try to represent linear orders on the ...
- 13.5k
6
votes
How does expected utility theory treat losses?
Gains and losses presuppose a reference point, which is not a feature in standard expected utility theory. In this theory, the only argument in the utility over wealth is $w$, the absolute level of ...
- 15.8k
6
votes
What is the point of all the models in an economics degree?
First, I have to say that mathematics is the most elegant and precise language to communicate ideas. My wife's been doing research on aesthetics and philosophy, and she spends a lot of time thinking "...
- 319
6
votes
Accepted
Is it necessary to ask permission before including someone in the acknowledgements of a economic research paper?
In short, no it is not necessary. I have never asked anyone for permission and I have never been asked. The people I thank usually have not read my paper (rarely anyone does, to be honest), but we ...
- 5,291
6
votes
Accepted
For any small perturbation dx, utility cannot change, or else, x* would not be optimal
It is basically a restatement of the first order condition - at an extrema (maxima or minima) of a well-behaved function its first derivative is equal to zero.
If you are at the point of maximization, ...
- 493
6
votes
Accepted
Does the Rybczynski theorem also hold in modern trade theory models?
The Rybczynski theorem is not directly applicable to the Melitz (2003) model, because the model the Rybczynski theorem is originating from, the Heckscher-Ohlin model, is built on different assumptions ...
5
votes
Accepted
understanding the proof of stochastic dominance.
That's just a question of notation. Note that
$$\mathcal{d}F(t) = f(t)\mathcal{d}t$$
Then the proof should be easy to understand.
- 181
5
votes
Monopoly and Taxes (Nicholson Exercise)
First let's look at the specific tax. The profit is
$$\pi_s=[P(q)-\tau_s]q-C(q).$$
Differentiating to establish the first-order condition:
$$P'(q)q+P(q)-\tau_s-C'(q)=0.$$
If we write $A=\tau_s q$ for ...
- 17k
5
votes
Accepted
Is utility in neoclassical economics a circular argument/concept?
Let's be clear--the concept of utility is both unfalsifiable (as a singular proposition) and useful.
Joan Robinson is right, of course: Utility as a definition is circular. If you read a textbook ...
- 66
5
votes
Accepted
Salop (1979) model for labor markets
I have provided one reference where Salop (1979) is applied to labor markets:
Staiger et. al (2010) 'Is There Monopsony in the Labor Market? Evidence from a Natural Experiment' Journal of Labor ...
- 3,798
5
votes
Accepted
What does omitting capital from production function assume about capital?
One way to think about it is the following:
Given a production function $F(L, K)$ of two inputs $L$ and $K$, if $K$ is fixed at $\overline{K}$ in the short run, then we can define the short run ...
- 9,431
4
votes
Accepted
Does the existence of insurance markets negate the broken window fallacy?
No, they don't negate the broken-window fallacy.
You're overthinking it, and that's leading you to the wrong conclusion.
The breaking of the window represents a loss of wealth. The activities around ...
- 8,168
4
votes
Calculating Market Concentration without sales data
Why not using the number of workers? And simply replacing sales (or output) by workers in the HHI or C4 indices. I saw this in the literature, but where? May be in a report of the German "...
- 3,481
4
votes
Accepted
Why does socialism not work?
Socialism doesn't work because an elite does not like to give up their privileges easily. After it took a wave of bourgeous revolution over a number of centuries to force the aristocracy to give up ...
- 311
4
votes
Accepted
Lecture notes competitive labor market with minimum wage
In the Varian textbook Intermediate Microeconomics (I am guessing in most micro textbooks), the chapter on Equilibrium discusses price controls in the presence of a demand and supply function. You can ...
- 29.6k
4
votes
Accepted
Can I rename a utility function based on its properties?
You can do whatever you want, it's your paper. Will it make it more difficult to publish? Yeah. Referees are fickle and easily annoyed.
You would not be the first person to go down this route. For ...
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