00UseMath

00UseMath - A i Ntit Lu @| i4@|Ut ? ,UL?L4Ut Wkhuh duh...

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A±i Ntit Lu @|±i4@|²Ut ²? ,UL?L4²Ut Wkhuh duh vl{ pdwkhpdwlfdo lghdv zklfk lqirup hfrqrplf dqdo|vlv= 4, Wkh glvwulexwlyh odz ri dulwkphwlf / zklfk ohdgv wr grxeoh hqwu| errnnhhslqj 5,Wkhlghdr id ixqfwlrq / zklfk pdnhv lw srvvleoh wr gr uljrurxv frxqwhuidfwxdo uhdvrqlqj 6, Vroylqj vlpxowdqhrxv htxdwlrqv / zklfk pdnhv lw srvvleoh wr ghvfuleh dq lqwhughshqghqw hfrqrp| 7, Wkh ghulydwlyh / zklfk h{suhvvhv wkh lghd ri pdujlqdo uhwxuq ru pdujlqdo surg0 xfw/ d fhqwudo frqfhsw lq hfrqrplfv 8, Frqfdylw| / zklfk lv wkh pdwkhpdwlfdo htxlydohqw ri glplqlvklqj pdujlqdo uh0 wxuqv 9, Wkh h{srqhqwldo ixqfwlrq dqg Hxohu*v frqvwdqw h / zklfk shuplwv d irupx0 odwlrq ri frqwlqxrxv frpsrxqg lqwhuhvw dqg h{srqhqwldo jurzwk ³ W?|hL_´U|²L? Vlqfh wkhlu ehjlqqlqjv/ wkh vrfldo vflhqfhv kdyh sdlg ols vhuylfh wr wkh lpsruwdqfh ri pdwkhpdwlfv1 Uhfdoo wkh idprxv lqvfulswlrq rq Sodwr*v Dfdghp|= _Ohw qr rqh ljqr0 udqw ri jhrphwu| sdvv wkurxjk wkhvh grruv1% Exw ri doo wkh vrfldo vflhqfhv/ hfrqrplfv kdv ehhq wkh prvw surirxqgo| d±hfwhg e| pdwkhpdwlfv1 Lqghhg/ zkloh Sodwr eholhyhg wkdw d plqg wudlqhg lq wkh orjlf ri pdwkhpdwlfv zrxog eh pruh sklorvrsklfdo/ kh frxog kdugo| kdyh dqwlflsdwhg wkh prghuq glvfryhu| wkdw wr gr hfrqrplfv lv wr gr pdwkhpdwlfv +doehlw ri dq hohphqwdu| qdwxuh,1 Hyhu| lpsruwdqw hfrqrplfv ghsduw0 phqw kdv vhyhudo surihvvruv vshfldol}lqj lq pdwkhpdwlfdo hfrqrplfv/ lq dgglwlrq wr d qxpehu ri rwkhuv zkr rffdvlrqdoo| xvh pdwkhpdwlfdo wrrov lq wkhlu wkhrul}lqj ru wkhlu hfrqrphwulfv1 Zk| lv wklvB Wkh ixqgdphqwdo hfrqrplf sulplwlyhv duh sulfh dqg frpprglw| dqg erwk ri wkhvh qdwxudoo| ohqg wkhpvhoyhv wr uhsuhvhqwdwlrq e| qxpehuv1 +Wklqn ri krz pxfk pruh gl²fxow lw lv wr txdqwli| d qhxurwlf glvrughu1, Qrw rqo| wkdw/ exw wkh sulfh dqg txdqwlw| ri d frpprglw| duh uhodwhg wr hdfk rwkhu lq d pdwkhpdwlfdoo| lqwhuhvwlqj zd|> wkh| fdq eh pxowlsolhg/ |lhoglqj uhyhqxh1 +Zkhq wkhuh duh pdq| frpprglwlhv/ dqg khqfh pdq| sulfhv dqg txdqwlwlhv/ zh pd| vshdn ri wkh yhfwru ri sulfhv dqg wkh yhfwru ri txdqwlwlhv/ dqg lw lv qrw kdug wr lpdjlqh krz olqhdu dojheud pljkw eh xvhixo lq pruh dgydqfhg hfrqrplfv frxuvhv1, Wr fdofxodwh wrwdo uhyhqxh ru wrwdo lqfrph zh wdnh wkh vxp ri sulfhv wlphv txdqwlwlhv1 Zkhq wkh vdph sulfh lv frpprq wr vhyhudo whupv/ dv lw zloo eh li wkh vdph frpprglw| lv surgxfhg e| gl±huhqw ³upv/ wkh glvwulexwlyh odz dssolhv dqg zh fdq zulwh wkh h{suhvvlrq iru wrwdo lqfrph lq wzr gl±huhqw zd|v1 4
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Wkh edvlv ri hfrqrplf dffrxqwlqj lv wkdw wkh vdph vxp fdq eh fdofxodwhg lq wzr zd|v +grxeoh hqwu| errnnhhslqj hwf1, Wkhuh lv d vhfrqg ixqgdphqwdo zd| lq zklfk pdwkhpdwlfv sod|v dq lqwulqvlf uroh lq hfrqrplfv/ dqg wkdw lv wkurxjk wkh qrwlrq ri d ixqfwlrq 1 Shukdsv wkh prvw lpsruwdqw lghd lq qhrfodvvlfdo hfrqrplfv lv wkdw djhqwv fkrrvh krz wr dfw rq wkh edvlv ri zkdw wkh| h{shfw wkhlu hqylurqphqw wr eh olnh/ l1h1/ rq wkh edvlv ri wkhlu shufhlyhg vhw ri rssruwxqlwlhv1 Li wkhlu rssruwxqlwlhv fkdqjh/ wkh| zloo xvxdoo| fkdqjh krz wkh| dfw1 Iru h{dpsoh/ li d frqvxphu fdq sxufkdvh zkdwhyhu kh zdqwv ri d jlyhq frpprglw| dw
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This note was uploaded on 12/08/2009 for the course ECON 251 taught by Professor Geanakoplos,john during the Fall '09 term at Yale.

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00UseMath - A i Ntit Lu @| i4@|Ut ? ,UL?L4Ut Wkhuh duh...

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