manofbear
  • Member for 5 years, 11 months
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What is the point of the indirect utility function?
5 votes

Recall that if $x$ and $y$ are consumption bundles, $u(x)$ is the consumer's utility function, and $u(x)>u(y)$ means the consumer strictly prefers bundle $x$ to bundle $y$. The indirect utility ...

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Show that an equilibrium in strictly dominant strategies is a unique Nash equilibrium
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4 votes

It will be useful to spell out the relevant definitions. Let $A_i$ be the set of possible actions for player $i$, $A_{-i}$ be the set of possible joint actions of all players except for player $i$, $...

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Is inflation good?
Accepted answer
2 votes

From an individual view, depends on if you're a net lender or borrower. If there is an unexpected increase in inflation and I'm a net borrower, then I pay the same nominal amount but effectively less ...

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Mathematics in modelling: Issues?
2 votes

Math is a tool. You can hardly blame a saw when you fail to sharpen your knife with it. So is math necessarily a poor tool? In my view, it's a wonderful language through which concepts can be ...

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Is there an economic theory of why people like to hold on to wealth?
1 votes

You could consider unspent money to be a call option. The set of future investment opportunities is unknown, so if you're optimistic about future opportunities it could be a valuable call option. So ...

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Foundational equations or concepts of Finance
1 votes

For corporate finance, a big question is "How does activity X by firms affect shareholder wealth?" Irrelevance propositions (eg Modigliani and Miller) argue that under some conditions, a particular ...

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A study plan to understand game theory papers
1 votes

Probably a more general response than you're hoping for, but I recently asked a (well-published) econ prof at my university which classes he'd recommend prior to doing research. He said he usually ...

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"Demand for money" - definition
1 votes

Demand is not the same as desire. The precise sense of demand in economics is usually a function that arises as a result of a constrained optimization problem. If there are $N$ goods, one of which is ...

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Cournot game with 2 firms
Accepted answer
1 votes

The approach is correct, but it is not true that firms have the same equilibrium production quantities because we are dealing with Cournot competition - it is because the firms have the same profit ...

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Why are some goods without close substitutes not sold in some countries?
1 votes

I would guess large barriers to entry for doing business in different countries: Differing laws, need new suppliers, more uncertain demand (less knowledge of customers and consumption habits). In less ...

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Who paid the difference on a warrant if i am winnnig
1 votes

A warrant is very similar to a call option (see "Comparison with call options" section here: https://en.wikipedia.org/wiki/Warrant_(finance)#Comparison_with_call_options) So we can suppose we're ...

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Convexity of the Market Demand Function
1 votes

Note that a function is convex if and only if multiplying that function by -1 yields a concave function. An example would be a vindictive mother in law, who derives pleasure from her son in law's ...

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The 'Economic Man' (Reference Request)
1 votes

One definition of rationality: Preferences are complete and transitive. This definition suggests that there is no such thing as right or wrong preferences - simply consistent and inconsistent. So ...

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Teaching ethics and its Economic value
0 votes

The payoff from ethics education is difficult to measure, but let's consider notable failures of ethics and suppose some of these were preventable - the prevented damages would be gains from teaching ...

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Negative expected value; risk neutral choice
0 votes

Risk neutral means the guy picks the thing that gives the highest expected value. EV of first bet is -5, which is less than 0, the EV of not taking the gamble. So he wont take it.

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Problems with economic modelling: good textbooks/articles/papers?
0 votes

Nassim Taleb has some books that discuss issues with using math to model real life, which I really enjoyed. He holds no punches so isn't for everyone. Relevant topics that stoos out to me include ...

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