Risk Aversion
HW#4:
Provide the missing proofs.
Due Monday, November 6
Let the set of lotteries L be the set of probability distributions on Z R (for
which expectation is well-dened) with a typical el
HW#1
Due Monday, Sept 12, class time
1
Part 1. Excess Demand and Equilibrium
Problem 1 Show that in an exchange economy with L goods and I consumers, such that all consumers have strictly convex, cont
Advanced Microeconomics Homework 1 Answer Key
Problem 1
(Answer key)
Discussion: Locally non-satiation and strongly monotone.
Monotone preferences imply that all the commodities are good and that more
Solutions to some review questions
December 14, 2006
1
Contract Theory
Problem 1 Consider the monopolistic screening problem with a continuum
of types from chapter 2 of BD. Solve for the full informat
Adverse selection
(based on BD(2005)
November 30, 2006
1
1.1
Full information
Monopolist Problem
Seller: T cq
Buyers have quasi-linear preferences i v (qi ) + mi
U (q, T, i ) = i v (q) T
Two types of
HW on Contract Theory
due November 28
Problem 1 Section 2.3 of the textbook. Consider the one-buyer one-seller
problem with a continuum of possible (payo-relevant) types, from , .
Suppose that monot
HW#1
Due Monday, Sept 18, class time
1
Edgeworth Box Economy
Problem 1 15.B.1
Problem 2 15.B.2. Pick some values for the endowments and let = =
1/2. Depict the two oer curves in the Edgeworth Box.
Pro
HW#1
Suggested solutions
1
Edgeworth Box Economy
Problem 1 Consider the Edgeworth Box economy with two consumers: A, B
and strictly positive endowments = ( 1A , 2A , 1B , 2B ) > 0. Let the
preferences
HW#2
Due Wednesday Oct 4, class time
1
Part 1. First welfare theorem: A group
project
Problem 1 Refer to the link on our webpage (right below) for an incompelte "easy" proof of the First Welfare Theor
HW#2
Suggested Solutions
1
Part 1. First welfare theorem: A group
project
Problem 1 Refer to the link on our webpage (right below) for an incomplete "easy" proof of the First Welfare Theorem for the t
Proposition 1 If SCF f : LN A is stratefy-proof and f LN = A, then f
is Pareto ecient and monotonic.
0
Proof. 1. Monotonicity. Suppose that f (L) = a. Take i. Consider Li :
0
aLi b aLi b b
want to s
EUT, an easy version.
October 11, 2006
Let L be the set of (simple) lotteries over the set of consequences (outcomes) C = cfw_x1 , ., xN .
L = (p1 , ., pN ) N1 .
Let a degenerate lottery with associa