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Revenue equivalence is a concept in auction theory that states that given certain conditions, any mechanism that results in the same outcomes (i.e. allocates items to the same bidders) also has the same expected revenue.
Additionally, assume there is a cost C associated with migrating from country 0 to country 1 and workers know all parameters and their own realization of e 0 and e 1. Borjas then uses the implications of the Roy model to infer something about what wages for immigrants in country 1 would have been had they stayed in country 0 and what wages for ...
RUM provides an alternative model: there is a ground-truth vector of utilities; each agent draws a utility for each alternative, based on a probability distribution whose mean value is the ground-truth. This model captures the strength of preferences, and rules out cyclic preferences.
Investment theory, which is near synonymous, encompasses the body of knowledge used to support the decision-making process of choosing investments, [4] [5] and the asset pricing models are then applied in determining the asset-specific required rate of return on the investment in question, and for hedging.
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The latter view is the consensus of later classical economists, with the Ricardo-Malthus-West theory of rent.) David Ricardo mixed this cost-of-production theory of prices with the labor theory of value, as that latter theory was understood by Eugen von Böhm-Bawerk and others. This is the theory that prices tend toward proportionality to the ...
Suppose firm has the cost structure (). The model is solved by backward induction. The leader considers what the best response of the follower is, i.e. how it will respond once it has observed the quantity of the leader. The leader then picks a quantity that maximises its payoff, anticipating the predicted response of the follower.
The Extended cost-loss model [9] [10] [11] is a simple extension of the cost-loss model. While the cost-loss model analyses the question "Should I take precautionary action now?" the extended cost-loss model analyses the question "Should I take precautionary action now or should I wait for the next forecast before deciding whether to take ...