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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.
In any game, payoffs are numbers that represent the motivations of players. Payoffs might represent profit, quantity, "utility," or different continuous measures (cardinal payoffs)
Not technically an auction, however a posted-price procedure during which the auctioneer sets a worth and sells to the primary bidder willing to pay it. The auction ends as soon as
A non-credible threat may be a threat created by a player in a very Sequential Game which might not be within the best interest for the player to hold out. The hope is that the thr
Rollback (often referred to as backward induction) is an iterative method for solving finite in depth kind or sequential games. First, one determines the optimal strategy of the pl
Identification is a problem of model formultion, rather than inf nlnde! estimation or appraisal. We say a model is identified if it is in a unique statistical form, enabling unique
Living from 1845 to 1926, Edgeworth's contributions to Economics still influence trendy game theorists. His Mathematical Psychics printed in 1881, demonstrated the notion of compet
What is the Iterated Dominant Strategy Equilibrium (IDSE) and associated pay-offs? Type your answer in the following form: (c,B) , (6, 4) if you think the outcome is
Perfect Nash equilibrium Two students prepare their homework assignment together for a course. They both enjoy getting high grade for their assignment, but they dislike workin
Cardinal payoffs are numbers representing the outcomes of a game where the numbers represent some continuum of values, such as money, market share or quantity. Cardinal payoffs per
An equilibrium refinement provides how of choosing one or many equilibria from among several in a very game. several games might contain many Nash equilibria, and therefore supply
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