Tagged Questions

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Economic Applications of Game Theory

I'm currently looking at this course in economic game theory. However, when attempting this example: In this question you are asked to price a simpliﬁed version of mortgage-backed securities. ...
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In Courty and Li (2000) “Sequential Screening”, what justifies the last equation in Lemma 3.2?

Regarding the article "Sequential Screening," in Review of Economic Studies, 2000 by Courty and Li: In Lemma 3.2, the last equality states that ...
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Expected revenue obtained by the Vickery auction with reserve price $1/2$

I would like to prove that the expected revenue of the Vickery auction with reserve price $1/2$ is $5/12$ when there are one item and two bidders the distribution of valuations are uniformly between ...
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Third and average price auction

Third price auction: the winner is the highst bidder but this time instead of paying the second highst bid, he would pay the third highst bid. -assume there are at least 3 bidders. - Average price ...
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Game Theory in relation to economics and sociology [closed]

I know some algebra and calculus, and have been reading about Linear Programming/Game Theory. How are the models in this field, even the infinite calculus models, usable in macro economics. Even ...
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How practically relevant is game theory?

I usually don't care too much about the practical relevance of nice mathematics :-) But this time, as I am looking to find some areas where I can apply maths and possibly collaborate with ...
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Precise definition of a “game of incomplete information” (Game Theory)

Question: In game theory, what is the precise definition of a "game of incomplete information"? What I've found so far: In the standard first year graduate economics textbook on microeconomics ...
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Robinson Crusoe economy problem

Consider the Robinson-Crusoe one-consumer, one-producer economy. Compute the equilibrium prices, profits and consumption when the production function is $f(L)=\sqrt{L}$, the utility function is ...
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Brouwer's fixed point theorem

Theorem: If $f:D^n\rightarrow D^n$ is continuous then there is $x \in D^n$ such that $f(x)=x$. To prove the theorem we assume that $f$ is cts but has no fixed point, that is $f(x)\neq x$ for all ...
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Why should a GE fail to exist in non-convex sets?

In an exchange economy with $2$ goods and $m$ identical Households where each household has utility function $u(x_1, x_2)$, together with positive endowments. If preferences are not convex, then why a ...
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Implications of axioms of expected utility theory

Axioms for Expected Utility: Let $\succ$ be a binary relation on $X$. A1. $\succ$ is asymmetric and negatively transitive. A2. Independence of Irrelevant Alternatives: If $p,q,r \in X$ and if ...
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Understanding a component of an equation of finite game repetition

I have the following equation: T = total times the game is repeated t = current period delta = discount rate u_i(a_i^t...) = the state payoff to player i I'm attempting to understand the ...
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Question related to the General equilibrium in exchange economies

I need some help in solving this question: Consider the following two-person, two-good economy. Persons $A$ and $B$ each consume two goods xylophones $(x)$ and yams $(y)$. Person $A$ enters the world ...
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Generalized Mechanism Design, Stanley Reiter diagram and Vickrey Auction

I am trying to learn this new topic, Mechanism Design and stumbled upon the "Stanley Reiter" diagram (see the top-right side on the page). I have also learned that the Second Price Sealed Bid ...
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questions on information set definition

The definition of "information set" is An information set is a set of decision nodes, all belonging to the same player, over which that player cannot distinguish. ...