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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.
A game tree (also referred to as the in depth form) may be a graphical illustration of a sequential game. It provides data concerning the players, payoffs, strategies, and also the
Explain about the term Game Theory. Game Theory: While the decisions of two or more firms considerably influence each others’ profits, in that case they are into a situation
Limitations of game theory in finance
A strategy is weakly dominant if, no matter what the other players do, the strategy earns a player a payoff a minimum of as high as the other strategy, and, the strategy earns a st
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Ship, Captain and Crew (sometimes called Ship, Captain and Mate) was a popular bar game played for drinks with five dice and throwing cup. Each player gets three throws. He has to
the first three words are ''''the boys'' down''''. what are the last three words?
A trigger strategy sometimes applied to repeated prisoner's dilemmas during which a player begins by cooperating within the initial amount, and continues to cooperate till one defe
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