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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.
1. Consider two firms producing an identical product in a market where the demand is described by p = 1; 200 2Y. The corresponding cost functions are c 1 (y 1 ) = y 2 1 and c 2
Borel was maybe the primary to outline the notion of games of strategy. He printed many papers on poker, incorporating themes of imperfect data and credibility. Whereas his writing
Consider two identical firms, for each firm, the total cost of producing q units of output is C(q)=0.5q^2. The price is determined as P(q1,q2)- a-q1-q2. Estimate Cournots outcome;
A game is one among complete data if all factors of the sport are common information. Specifically, every player is awake to all different players, the timing of the sport, and als
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About assignment The goal of this assignment is for the student to propose a new game of your own and to be able to present their ideas in clear and convincing manner. This pro
A uniform worth auction may be a multiunit auction during which each winning bidder pays identical worth, which can or might not be equal to the participants' bids. Alternatively,
1. Two firms, producing an identical good, engage in price competition. The cost functions are c 1 (y 1 ) = 1:17y 1 and c 2 (y 2 ) = 1:19y 2 , correspondingly. The demand functi
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Suppose that the incumbent monopolist, in the previous question, can decide (before anything else happens) to make an irreversible investment in extra Capacity (C), or Not (N). If
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