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A simple example of a preference order over three goods, in which orange is preferred to a banana, but an apple is preferred to an orange. In economics, and in other social sciences, preference refers to an order by which an agent, while in search of an "optimal choice", ranks alternatives based on their respective utility.
An economic variable can be exogenous in some models and endogenous in others. In particular this can happen when one model also serves as a component of a broader model.
Economists often invoke IIA when building descriptive (positive) models of to ensure agents have well-defined preferences that can be used for making testable predictions. If agents' behavior or preferences are allowed to change depending on irrelevant circumstances, any model could be made unfalsifiable by claiming some irrelevant circumstance ...
One of the best benefits of working with an independent insurance agent is having them shop for insurance quotes for you. With access to multiple companies, the agent can check rates and coverage ...
In economics, an agent is an actor (more specifically, a decision maker) in a model of some aspect of the economy. Typically, every agent makes decisions by solving a well- or ill-defined optimization or choice problem. For example, buyers and sellers are two common types of agents in partial equilibrium models of a single market.
In consumer theory, a consumer's preferences are called homothetic if they can be represented by a utility function which is homogeneous of degree 1. [1]: 146 For example, in an economy with two goods ,, homothetic preferences can be represented by a utility function that has the following property: for every >:
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
The resource is a medication, the agents are patients, and the utility functions represent their chance of recovery - () is the probability of agent to recover by getting doses of the medication. In any case, the society has to decide how to divide the resource among the agents: it has to find a vector y 1 , … , y n {\displaystyle y_{1},\dots ...