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A priori knowledge usually enables us to decide that some coefficients must be zero in the particular equation, while they assume non-zero values in other equations of the system. We said that identification of an equation is based on variables not included (not appearing) in it. To be identifiable an equation must be independent of one or more important variables, which are included in other equations of the system. Such excluded variables, if operative during the sample period, will generate shifts in the other equations of the model, which will in turn identify the particular equation from which they are absent (i.e. in which they appear with zero coefficient).
Based on the a priori information a list can be prepared, which should be as complete as possible, of the factors which are relevant to the phenomenon being studied. The list can help us decide which of these factors would normally appear in each relationship. For example, assume that we want to study the demand for an agricultural product. The demand equation belongs to a system of equations describing the market mechanism.
Suppose that the incumbent monopolist, in the previous question, can decide (before anything else happens) to make an irreversible investment in extra Capacity (C), or Not (N). If
Two individuals (i ∈ {1, 2}) work independently on a joint project. They each independently decide how much eort ei they put. Eort choice has to be any real number between 0 and
A class of games of imperfect data during which one player (the principal) tries to supply incentives to the opposite (the agent) to encourage the agent to act within the principal
a) Define the term Nash equilibrium b) You are given the following pay-off matrix: Strategies for player 1 Strategies for player 2
1. Consider a two-player game where player A chooses "Up," or "Down" and player B chooses "Left," "Center," or "Right". Their payoffs are as follows: When player A chooses "Up" and
Stanley is auctioning an item that he values at zero. Betty and Billy, the two potential buyers, each have independent private values which are drawn from a uniform distribution, P
The">http://www.expertsmind.com/questions/green-beard-strategy-30135520.aspx The same questions on this link.
A strategy is strictly dominant if, no matter what the other players do, the strategy earns a player a strictly higher payoff than the other. Hence, a method is strictly dominant i
Consider a game in which player 1 chooses rows, player 2 chooses columns and player 3 chooses matrices. Only Player 3''s payoffs are given below. Show that D is not a best response
Combining Simultaneous and Sequential Moves The material in this chapter covers a variety of issues that require some knowledge of the analysis of both sequential- move
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