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Edgeworth's Limit Theorem
Edgeworth's limit theorem is an economic theorem created by Francis Ysidro Edgeworth that examines a range of possible outcomes which may result from free market exchange or barter between groups of people. It shows that while the precise location of the final settlement (the ultimate division of goods) between the parties is indeterminate, there is a range of potential outcomes which shrinks as the number of traders increases. Theoretical outline Francis Ysidro Edgeworth first described what later became known as the limit theorem in his book ''Mathematical Psychics'' (1881). He used a variant of what is now known as the Edgeworth box (with quantities traded, rather than quantities possessed, on the relevant axes) to analyse trade between groups of traders of various sizes. In general he found that 'Contract without competition is indeterminate, contract with perfect competition is perfectly determinate, ndcontract with more or less perfect competition is less or more indetermina ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economics
Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interactions of Agent (economics), economic agents and how economy, economies work. Microeconomics analyzes what's viewed as basic elements in the economy, including individual agents and market (economics), markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the economy as a system where production, consumption, saving, and investment interact, and factors affecting it: employment of the resources of labour, capital, and land, currency inflation, economic growth, and public policies that have impact on glossary of economics, these elements. Other broad distinctions within economics include those between positive economics, desc ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Barter Controversy
In trade, barter (derived from ''baretor'') is a system of exchange in which participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money. Economists distinguish barter from gift economies in many ways; barter, for example, features immediate reciprocal exchange, not one delayed in time. Barter usually takes place on a bilateral basis, but may be multilateral (if it is mediated through a trade exchange). In most developed countries, barter usually exists parallel to monetary systems only to a very limited extent. Market actors use barter as a replacement for money as the method of exchange in times of monetary crisis, such as when currency becomes unstable (such as hyperinflation or a deflationary spiral) or simply unavailable for conducting commerce. No ethnographic studies have shown that any present or past society has used barter without any other medium of exchange or measurement, and an ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Central Limit Theorem
In probability theory, the central limit theorem (CLT) establishes that, in many situations, when independent random variables are summed up, their properly normalized sum tends toward a normal distribution even if the original variables themselves are not normally distributed. The theorem is a key concept in probability theory because it implies that probabilistic and statistical methods that work for normal distributions can be applicable to many problems involving other types of distributions. This theorem has seen many changes during the formal development of probability theory. Previous versions of the theorem date back to 1811, but in its modern general form, this fundamental result in probability theory was precisely stated as late as 1920, thereby serving as a bridge between classical and modern probability theory. If X_1, X_2, \dots, X_n, \dots are random samples drawn from a population with overall mean \mu and finite variance and if \bar_n is the sample mean of t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Nash Equilibrium
In game theory, the Nash equilibrium, named after the mathematician John Nash, is the most common way to define the solution of a non-cooperative game involving two or more players. In a Nash equilibrium, each player is assumed to know the equilibrium strategies of the other players, and no one has anything to gain by changing only one's own strategy. The principle of Nash equilibrium dates back to the time of Cournot, who in 1838 applied it to competing firms choosing outputs. If each player has chosen a strategy an action plan based on what has happened so far in the game and no one can increase one's own expected payoff by changing one's strategy while the other players keep their's unchanged, then the current set of strategy choices constitutes a Nash equilibrium. If two players Alice and Bob choose strategies A and B, (A, B) is a Nash equilibrium if Alice has no other strategy available that does better than A at maximizing her payoff in response to Bob choosing B, and Bob ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
John Forbes Nash
John Forbes Nash Jr. (June 13, 1928 – May 23, 2015) was an American mathematician who made fundamental contributions to game theory, real algebraic geometry, differential geometry, and partial differential equations. Nash and fellow game theorists John Harsanyi and Reinhard Selten were awarded the 1994 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (popularly known as the Nobel Prize in Economics). In 2015, he and Louis Nirenberg were awarded the Abel Prize for their contributions to the field of partial differential equations. As a graduate student in the Mathematics Department at Princeton University, Nash introduced a number of concepts (including Nash equilibrium and the Nash bargaining solution) which are now considered central to game theory and its applications in various sciences. In the 1950s, Nash discovered and proved the Nash embedding theorems by solving a system of nonlinear partial differential equations arising in Riemannian ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Game Theory
Game theory is the study of mathematical models of strategic interactions among rational agents. Myerson, Roger B. (1991). ''Game Theory: Analysis of Conflict,'' Harvard University Press, p.&nbs1 Chapter-preview links, ppvii–xi It has applications in all fields of social science, as well as in logic, systems science and computer science. Originally, it addressed two-person zero-sum games, in which each participant's gains or losses are exactly balanced by those of other participants. In the 21st century, game theory applies to a wide range of behavioral relations; it is now an umbrella term for the science of logical decision making in humans, animals, as well as computers. Modern game theory began with the idea of mixed-strategy equilibria in two-person zero-sum game and its proof by John von Neumann. Von Neumann's original proof used the Brouwer fixed-point theorem on continuous mappings into compact convex sets, which became a standard method in game theory and mathema ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Tatonnement
A Walrasian auction, introduced by Léon Walras, is a type of simultaneous auction where each agent calculates its demand for the good at every possible price and submits this to an auctioneer. The price is then set so that the total demand across all agents equals the total amount of the good. Thus, a Walrasian auction perfectly matches the supply and the demand. Walras suggested that equilibrium would always be achieved through a process of tâtonnement (French for "trial and error"), a form of hill climbing. More recently, however, the Sonnenschein–Mantel–Debreu theorem proved that such a process would not necessarily reach a unique and stable equilibrium, even if the market is populated with perfectly rational agents. Walrasian auctioneer The ''Walrasian auctioneer'' is the presumed auctioneer that matches supply and demand in a market of perfect competition. The auctioneer provides for the features of perfect competition: perfect information and no transaction costs. The ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Perfect Competition
In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition. In Economic model, theoretical models where conditions of perfect competition hold, it has been demonstrated that a Market (economics), market will reach an Economic equilibrium, equilibrium in which the quantity supplied for every Goods and services, product or service, including Workforce, labor, equals the quantity demanded at the current price. This equilibrium would be a Pareto optimum. Perfect competition provides both allocative efficiency and productive efficiency: * Such markets are ''allocatively efficient'', as output will always occur where marginal cost is equal to average revenue i.e. price (MC = AR). In perfect competition, any Profit maximization, profit-maximizing producer faces a market price equal to its marginal cost (P = MC). This implies that ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Equilibrium Price
In economics, economic equilibrium is a situation in which economic forces such as supply and demand are balanced and in the absence of external influences the ( equilibrium) values of economic variables will not change. For example, in the standard text perfect competition, equilibrium occurs at the point at which quantity demanded and quantity supplied are equal. Market equilibrium in this case is a condition where a market price is established through competition such that the amount of goods or services sought by buyers is equal to the amount of goods or services produced by sellers. This price is often called the competitive price or market clearing price and will tend not to change unless demand or supply changes, and quantity is called the "competitive quantity" or market clearing quantity. But the concept of ''equilibrium'' in economics also applies to imperfectly competitive markets, where it takes the form of a Nash equilibrium. Understanding economic equilibriu ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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