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1500 questions
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How successful will OPEC's predatory dumping strategy be?
Since the fracking industry in the US has started to grow rapidly, I have heard increasing reports that OPEC is attempting some form of predatory dumping in the hopes of making the fracking industry in the US unprofitable.
How successful do…
Mathematician
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Common knowledge in model formulation and solution
Economics models usually assume that the structure of the economy is common knowledge among agents.
Mathematically, an event is common knowledge if it lies in the meet of all agents' information sets. (The meet of a family of $\sigma$-algebras is…
Michael
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What is a rational consumer?
There is a lot of debate on whether or not consumers and investors are rational. Unfortunately, I haven't seen much qualification for what is called a rational consumer. What are the requirements that must be met for us to consider a consumer to be…
EconJohn
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Has any progress been made on the Pacman Conjecture on Finite Time Horizons?
The Pacman conjecture states that the optimal strategy for monopolistic durable goods manufacturers is to set price high and slowly drop it (i.e. eating their way down the demand curve).
Empirically this seems to hold as it's the strategy employed…
Jason Nichols
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Can a game with a unique pure strategy Nash equilibrium also have a mixed strategy equilibria?
Consider an arbitrary 2x2 simultaneous game with complete information. Say that the model has only one pure-strategy Nash equilibrium. For example (first pay-off refers to Player 1):
Player 2
+---+-------+-------+
…
luchonacho
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Examples of behavioural breakdowns in game theory?
I'm trying to compile multiple scenarios of the breakdown of game theory. Specifically, I'm looking for scenarios where game theory predicts certain behaviours, but in real-world scenarios or experiments, people tend to behave quite…
Tripartio
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How did reducing the employment gender gap impact the US economy?
Premise
In the United States, women have been replacing men in the workforce, or rather were from sometime prior to 1976 until the mid-90's. (The general upward trend is from the recent recession, sorry, I'm recycling a graph from another…
Jason Nichols
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Predicting $y$ when response variable is $\ln(y)$
My estimated model is
$$\hat \ln(y_t)=9.873-0.472\ln(x_{t2})-0.01x_{t3}$$
I'm asked to find a predictive CI at 95% confidence for the mean of $y_0$, when $x_{02}=250$, and $x_{03}=8$. We're to assume that $s^2 x_0(X^TX)^{-1}x_0^T=0.000243952$,…
An old man in the sea.
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State of general equilibrium theories Post Blanchard 2008
This question arose from a useful comment I received upon answering a question on this site, and a recent question from a doctoral student.
The so-called theory of general equilibrium (including the many variants) is a cornerstone of economic…
Rusan Kax
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Lee and Saez (2012): Pareto-Improvement?
I'm interested in the following quote that came up in this earlier answer.
Second, when labor supply responses are along the extensive margin
only, which is the empirically relevant case, the co-existence of a
minimum wage with a positive tax…
FooBar
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7
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3 answers
Why don't prices of USA labor and Mexican labor equalise?
That Mexicans workers get paid less US workers is a dynamic which motivates the moving of production to Mexico. This idea can be abstracted to Developed Markets (DM) labor and Emerging Markets (EM) labor. This is driving many recent political…
S Meaden
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How much would the EU budget reduce by after Brexit?
Would it reduce the budget of some €133bn by the gross amount after the rebate but before any spending from the EU into the UK (€17bn, about 12.5% according to Table 6, Page 11 of the 2017 draft budget) or by the net amount, which is some lower…
768
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An agent's expected utility depends only on mean and variance
Consider an agent with the expected utility function $U(L) = \sum_{s=1}^{S}\pi_s U(Y_s)$ over the lottery $L = (Y_s, \pi_s)$ where $\pi_s$ is the probability of state $s$, $Y_s$ are state $s$ payoffs, and $U(y_s) = -\frac{1}{2}(\alpha - Y_s)^2$ for…
Wolfy
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Time costs and the St. Petersburg paradox
In the St. Petersburg paradox, we end up with the problem that a rational agent should be willing to play the game for any wager, if we look at expected income or utility of expected income. The standard "solution" to this is to instead look at…
user169
7
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4 answers
Why doesn't Barnes and Noble just lower its prices?
For my birthday, I wanted a cookbook. So I went to Barnes and Noble and selected it: $40.
Before I got the register I checked it on Amazon: $20.
I started price matching every single cookbook I was interested in and collectively, i could save 60%…
Danny Rodriguez
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