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Envelope Theorem
In mathematics and economics, the envelope theorem is a major result about the differentiability properties of the value function of a parameterized optimization problem. As we change parameters of the objective, the envelope theorem shows that, in a certain sense, changes in the optimizer of the objective do not contribute to the change in the objective function. The envelope theorem is an important tool for comparative statics of optimization models. The term envelope derives from describing the graph of the value function as the "upper envelope" of the graphs of the parameterized family of functions \left\ _ that are optimized. Statement Let f(x,\alpha) and g_(x,\alpha), j = 1,2, \ldots, m be real-valued continuously differentiable functions on \mathbb^, where x \in \mathbb^ are choice variables and \alpha \in \mathbb^ are parameters, and consider the problem of choosing x, for a given \alpha, so as to: : \max_ f(x, \alpha) subject to g_(x,\alpha) \geq 0, j = 1,2, \ldots, m and ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Mathematics
Mathematics is a field of study that discovers and organizes methods, Mathematical theory, theories and theorems that are developed and Mathematical proof, proved for the needs of empirical sciences and mathematics itself. There are many areas of mathematics, which include number theory (the study of numbers), algebra (the study of formulas and related structures), geometry (the study of shapes and spaces that contain them), Mathematical analysis, analysis (the study of continuous changes), and set theory (presently used as a foundation for all mathematics). Mathematics involves the description and manipulation of mathematical object, abstract objects that consist of either abstraction (mathematics), abstractions from nature orin modern mathematicspurely abstract entities that are stipulated to have certain properties, called axioms. Mathematics uses pure reason to proof (mathematics), prove properties of objects, a ''proof'' consisting of a succession of applications of in ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Mathematics Of Operations Research
''Mathematics of Operations Research'' is a quarterly peer-reviewed scientific journal established in February 1976. It focuses on areas of mathematics relevant to the field of operations research such as continuous optimization, discrete optimization, game theory, machine learning, simulation methodology, and stochastic models. The journal is published by INFORMS (Institute for Operations Research and the Management Sciences). the journal has a 2017 impact factor of 1.078. History The journal was established in 1976. The founding editor-in-chief was Arthur F. Veinott Jr. (Stanford University). He served until 1980, when the position was taken over by Stephen M. Robinson, who held the position until 1986. Erhan Cinlar served from 1987 to 1992, and was followed by Jan Karel Lenstra (1993-1998). Next was Gérard Cornuéjols (1999-2003) and Nimrod Megiddo (2004-2009). Finally came Uri Rothblum (2009-2012), Jim Dai (2012-2018), and the current editor-in-chief Katya Scheinberg (20 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Production Economics
Production is the process of combining various inputs, both material (such as metal, wood, glass, or plastics) and immaterial (such as plans, or knowledge) in order to create output. Ideally this output will be a good or service which has value and contributes to the utility of individuals. The area of economics that focuses on production is called production theory, and it is closely related to the consumption (or consumer) theory of economics. The production process and output directly result from productively utilising the original inputs (or factors of production). Known as primary producer goods or services, land, labour, and capital are deemed the three fundamental factors of production. These primary inputs are not significantly altered in the output process, nor do they become a whole component in the product. Under classical economics, materials and energy are categorised as secondary factors as they are byproducts of land, labour and capital. Delving further, primary f ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Value Function
The value function of an optimization problem gives the value attained by the objective function at a solution, while only depending on the parameters of the problem. In a controlled dynamical system, the value function represents the optimal payoff of the system over the interval , t1/var> when started at the time-t state variable x(t)=x. If the objective function represents some cost that is to be minimized, the value function can be interpreted as the cost to finish the optimal program, and is thus referred to as "cost-to-go function." In an economic context, where the objective function usually represents utility, the value function is conceptually equivalent to the indirect utility function. In a problem of optimal control, the value function is defined as the supremum of the objective function taken over the set of admissible controls. Given (t_, x_) \in , t_\times \mathbb^, a typical optimal control problem is to : \text \quad J(t_, x_; u) = \int_^ I(t,x(t), u(t)) \, \m ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Roy's Identity
Roy's identity (named after French economist René Roy) is a major result in microeconomics having applications in consumer choice and the theory of the firm. The lemma relates the ordinary (Marshallian) demand function to the derivatives of the indirect utility function. Specifically, denoting the indirect utility function as v(p,w), the Marshallian demand function for good i can be calculated as :x_^(p,w)=-\frac where p is the price vector of goods and w is income, and where the superscript ^m indicates Marshallian demand. The result holds for continuous utility functions representing locally non-satiated and strictly convex preference relations on a convex consumption set, under the additional requirement that the indirect utility function is differentiable in all arguments. Roy's identity is akin to the result that the price derivatives of the expenditure function give the Hicksian demand functions. The additional step of dividing by the wealth derivative of the indirec ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Le Chatelier's Principle
In chemistry, Le Chatelier's principle (pronounced or ) is a principle used to predict the effect of a change in conditions on chemical equilibrium. Other names include Chatelier's principle, Braun–Le Chatelier principle, Le Chatelier–Braun principle or the equilibrium law. The principle is named after French chemist Henry Louis Le Chatelier who enunciated the principle in 1884 by extending the reasoning from the Van 't Hoff relation of how temperature variations changes the equilibrium to the variations of pressure and what's now called chemical potential, and sometimes also credited to Karl Ferdinand Braun, who discovered it independently in 1887. It can be defined as: In scenarios outside thermodynamic equilibrium, there can arise phenomena in contradiction to an over-general statement of Le Chatelier's principle. Le Chatelier's principle is sometimes alluded to in discussions of topics other than thermodynamics. Thermodynamic statement Le Chatelier–Braun principl ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Danskin's Theorem
In convex analysis, Danskin's theorem is a theorem which provides information about the derivatives of a function of the form f(x) = \max_ \phi(x,z). The theorem has applications in optimization, where it sometimes is used to solve minimax problems. The original theorem given by J. M. Danskin in his 1967 monograph provides a formula for the directional derivative of the maximum of a (not necessarily convex) directionally differentiable function. An extension to more general conditions was proven 1971 by Dimitri Bertsekas. Statement The following version is proven in "Nonlinear programming" (1991). Suppose \phi(x,z) is a continuous function of two arguments, \phi : \R^n \times Z \to \R where Z \subset \R^m is a compact set. Under these conditions, Danskin's theorem provides conclusions regarding the convexity and differentiability of the function f(x) = \max_ \phi(x,z). To state these results, we define the set of maximizing points Z_0(x) as Z_0(x) = \left\. Danskin's theorem t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Maximum Theorem
The maximum theorem provides conditions for the continuity of an optimized function and the set of its maximizers with respect to its parameters. The statement was first proven by Claude Berge in 1959. The theorem is primarily used in mathematical economics and optimal control. Statement of theorem Maximum Theorem. Let X and \Theta be topological spaces, f:X\times\Theta\to\mathbb be a continuous function on the product X \times \Theta, and C:\Theta\rightrightarrows X be a compact-valued correspondence such that C(\theta) \ne \emptyset for all \theta \in \Theta. Define the ''marginal function'' (or ''value function'') f^* : \Theta \to \mathbb by :f^*(\theta)=\sup\ and the ''set of maximizers'' C^* : \Theta \rightrightarrows X by : C^*(\theta)= \mathrm\max\ = \ . If C is continuous (i.e. both upper and lower hemicontinuous) at \theta, then the value function f^* is continuous, and the set of maximizers C^* is upper-hemicontinuous with nonempty and compact values. As a co ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Shadow Price
A shadow price is the monetary value assigned to an abstract or intangible commodity which is not traded in the marketplace. This often takes the form of an externality. Shadow prices are also known as the recalculation of known market prices in order to account for the presence of distortionary market instruments (e.g. quotas, tariffs, taxes or subsidies). Shadow prices are the real economic prices given to goods and services after they have been appropriately adjusted by removing distortionary market instruments and incorporating the societal impact of the respective good or service. A shadow price is often calculated based on a group of assumptions and estimates because it lacks reliable data, so it is subjective and somewhat inaccurate. The need for shadow prices arises as a result of “externalities” and the presence of distortionary market instruments. An externality is defined as a cost or benefit incurred by a third party as a result of production or consumption of a g ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Saddle Point
In mathematics, a saddle point or minimax point is a Point (geometry), point on the surface (mathematics), surface of the graph of a function where the slopes (derivatives) in orthogonal directions are all zero (a Critical point (mathematics), critical point), but which is not a local extremum of the function. An example of a saddle point is when there is a critical point with a relative minimum along one axial direction (between peaks) and a relative maxima and minima, maximum along the crossing axis. However, a saddle point need not be in this form. For example, the function f(x,y) = x^2 + y^3 has a critical point at (0, 0) that is a saddle point since it is neither a relative maximum nor relative minimum, but it does not have a relative maximum or relative minimum in the y-direction. The name derives from the fact that the prototypical example in two dimensions is a surface (mathematics), surface that ''curves up'' in one direction, and ''curves down'' in a different dir ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Convex Set
In geometry, a set of points is convex if it contains every line segment between two points in the set. For example, a solid cube (geometry), cube is a convex set, but anything that is hollow or has an indent, for example, a crescent shape, is not convex. The boundary (topology), boundary of a convex set in the plane is always a convex curve. The intersection of all the convex sets that contain a given subset of Euclidean space is called the convex hull of . It is the smallest convex set containing . A convex function is a real-valued function defined on an interval (mathematics), interval with the property that its epigraph (mathematics), epigraph (the set of points on or above the graph of a function, graph of the function) is a convex set. Convex minimization is a subfield of mathematical optimization, optimization that studies the problem of minimizing convex functions over convex sets. The branch of mathematics devoted to the study of properties of convex sets and convex f ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Slutsky Matrix
In microeconomics, the Slutsky equation (or Slutsky identity), named after Eugen Slutsky, relates changes in Marshallian (uncompensated) demand to changes in Hicksian (compensated) demand, which is known as such since it compensates to maintain a fixed level of utility. There are two parts of the Slutsky equation, namely the substitution effect and income effect. In general, the substitution effect is negative. Slutsky derived this formula to explore a consumer's response as the price of a commodity changes. When the price increases, the budget set moves inward, which also causes the quantity demanded to decrease. In contrast, if the price decreases, the budget set moves outward, which leads to an increase in the quantity demanded. The substitution effect is due to the effect of the relative price change, while the income effect is due to the effect of income being freed up. The equation demonstrates that the change in the demand for a good caused by a price change is the result ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
