Economics Stack Exchange
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Real option effect of uncertainty - irreversiblity vs fixed cost

There is a growing literature (e.g. Bloom, 2009) studying negative macroeconomic impacts of heightened uncertainty. One channel through which uncertainty can discourage economic activity, and investment in particular, is via real option effect,…
ivansml
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Is belief in future dividends the only long term value of stock?

Are future dividends the primary value backing that a stock price will rise? (Let's assume that purchase by a competitor is an unlikely event and discount the value this might have). It seems to me that many stocks are worth astonishingly many…
user48956
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Proofs in the Appendix A of Sannikov (2007)

I have a few questions about the proofs in Appendix A of Sannikov (2007), Games with Imperfectly Observable Actions in Continuous Time. In lemma 4, when he shows the Lipschitz continuity of $H_a(w,\theta)$ in $\theta$, he derives an auxiliary…
Theoretical Economist
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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 not fit all. The prevalence of framing effects…
user157623
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Self-selection bias during the course of experiments

Suppose you are running a randomized experiment to assess the effect of $X$, say some training program for unemployed people, on $Y$, say the chance of finding a job in the coming year. Suppose also that $X$ takes time : maybe it lasts for several…
Martin Van der Linden
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9 answers

What Level of Government Debt to GDP Ratio is Sustainable?

I was reading that Japan has a debt to gdp ratio of 240pc and I cannot understand why this has not left the country "bankrupt"? From looking at this like an ordinary person this level would be completely unmanageable. Furthermore, considering Greece…
Trajan
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Why does savings equal investment (scenario)?

Scenario 1: There's an economy of two people (Joe and Amanda). Joe buys a $500$ dollar car from Amanda (which she made herself from raw materials in her back yard). Amanda takes the $500$ dollars and hides it under her bed. Savings = $500$ dollars,…
sinθ
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Examples of Applied Micro Paper with R (!) Code and Data in Public Repository

Can anyone suggest examples of relatively simple applied micro papers (e.g. an RCT or straightforward regression model) of possible interest to a general audience, that have their data and code, written in R, as opposed to Stata or anything else, in…
Garret C
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Intuitive explanation of $S(p,w)\cdot p=0$

Can anyone provide an intuitive explanation of why the Slutsky matrix right multiplied by the price vector yields a zero matrix? I know this is true but I do not really understand why it is true. Can anyone help here?
Microhelp
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Did previous researchers fail to detect the hot hand simply because of a statistical fallacy?

Many basketball fans/players believe that having made several shots in a row, the next shot is more likely to go in. This is sometimes called the hot hand. Starting (I think) with Gilovich, Mallone, and Tversky (1985), it was "shown" that this was…
user18
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3 answers

Open access datasets for teaching IV regression

I am looking for a dataset to show (to a group of engineers) how the instrumental variables technique is used in econometric practice. I could always make up my own data, but I think it might be more interesting to everyone using real (not to…
snoram
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Game theory for showing interest and availability when dating

The more cynical (or perhaps realistic) of us would argue that there's a fair amount of game theory going on in the dating game. For example a classic ploy is 'Don't ring for three days, because you don't want to come across too keen'. Of course…
dwjohnston
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When do supply and demand curves shift?

Let's assume that the price of apples has risen and that the quantity of apples sold during the last couple of weeks has decreased. From that, we can infer that the supply curve must've shifted to the left. I still have trouble fully understanding…
LesPaul
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What are some reasons for decline of georgism?

I understand that Georgism was a major economic idea in the late 19th century. The idea of a simple land-value tax and basic income derived from an equitable distribution of natural resource exploitation seem to be great ideas solving many of the…
amphibient
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Why do some news say China’s economy is bad yet still predicting its 2023 growth to be around 5 per cent?

I saw many news articles saying the Chinese economy is not in a good state, e.g. Banks cut 2023 GDP growth forecast from around 5.5 to 5. If the US economy grows by 5% it will be regarded as a “miracle”. So where is this “Chinese economy is not…
aaa acb
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