Search results
Results from the WOW.Com Content Network
Framing and prospect theory has been applied to a diverse range of situations which appear inconsistent with standard economic rationality: the equity premium puzzle, the excess returns puzzle and long swings/PPP puzzle of exchange rates through the endogenous prospect theory of Imperfect Knowledge Economics, the status quo bias, various ...
Non‑convex sets have been incorporated in the theories of general economic equilibria, [2] of market failures, [3] and of public economics. [4] These results are described in graduate-level textbooks in microeconomics, [5] general equilibrium theory, [6] game theory, [7] mathematical economics, [8] and applied mathematics (for economists). [9]
A function f is concave over a convex set if and only if the function −f is a convex function over the set. The sum of two concave functions is itself concave and so is the pointwise minimum of two concave functions, i.e. the set of concave functions on a given domain form a semifield.
A set of convex-shaped indifference curves displays convex preferences: Given a convex indifference curve containing the set of all bundles (of two or more goods) that are all viewed as equally desired, the set of all goods bundles that are viewed as being at least as desired as those on the indifference curve is a convex set.
The following are among the properties of log-concave distributions: If a density is log-concave, so is its cumulative distribution function (CDF). If a multivariate density is log-concave, so is the marginal density over any subset of variables. The sum of two independent log-concave random variables is log-concave. This follows from the fact ...
In economics, non-convexity refers to violations of the convexity assumptions of elementary economics.Basic economics textbooks concentrate on consumers with convex preferences (that do not prefer extremes to in-between values) and convex budget sets and on producers with convex production sets; for convex models, the predicted economic behavior is well understood.
An agent is risk-averse if and only if the utility function is concave. For instance u(0) could be 0, u(100) might be 10, u(40) might be 5, and for comparison u(50) might be 6. The expected utility of the above bet (with a 50% chance of receiving 100 and a 50% chance of receiving 0) is = (() + ()) /,
In economics, an Edgeworth box, sometimes referred to as an Edgeworth-Bowley box, is a graphical representation of a market with just two commodities, X and Y, and two consumers. The dimensions of the box are the total quantities Ω x and Ω y of the two goods.