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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.
The Cournot adjustment model, initial proposed by Augustin Cournot within the context of a duopoly, has players choose methods sequentially. In every amount, a firm selects the act
Named when Vilfredo Pareto, Pareto potency (or Pareto optimality) may be alive of potency. An outcome of a game is Pareto economical if there's no different outcome that produces e
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James and Dean are playing the Chicken game. They have noticed that their payout for being perceived as "tough" depends on the size of the crowd. The larger the crowd, the "cooler"
. A bid is an sign by a potential buyer of the price the buyer is ready to pay for the object being auctioned. In a Procurement Auction, the bid is an sign of the price a seller is
In a positive add game, the combined payoffs of all players aren't identical in each outcome of the sport. This differs from constant add (or zero add) games during which all outco
a) Define the term Nash equilibrium b) You are given the following pay-off matrix: Strategies for player 1 Strategies for player 2
A mixed strategy during which the player assigns strictly positive chance to each pure strategy.Morgenstern, Oskar,Coauthor of Theory of Games and Economic Behavior with John von N
Treating probability as a logic, Thomas Bayes defined the following: Pr(X|Y)=Pr(Y|X)Pr(X)/Pr(Y) For example, probability that the weather was bad given that our friends playe
Game Theory has evolved since its origins as an idea exercise for educational mathematicians. Taught in prime business faculties, economics departments, and even military academies
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