ECON 171
Prof. Levkoff
Problem Set 6 Solutions
Part I. Evaluate the validity of each of the following statements. Be sure to clearly
accompany your explanation using graphs and equations where appropriate.
a) In a mixed strategy Nash equilibrium, a player
Economics 171
Problem Set 1 Solutions
S. Levkoff
Part I
a) False. CDFs cannot be downward sloping. By definition, a CDF if a function given by:
( )
If
, then
(
)
(
(
)
). That is, a CDF must be monotone non-decreasing.
The intuition for this is straightfo
Economics 171
Problem Set 2 Solutions
S. Levkoff
Part I
a) True. We are given that
whether
where
,
, and
. We want to determine
. Recall that we can write covariance as:
[(
)(
)]
This implies:
Thus
.
b) This is generally false, due to systematic risk. If
Econ 171 Fall 2013
PS 5 Solutions
Levkoff
Part I
(a)
(b)
False. It relies on the assumption that poorer people have a higher value for dollars subjectively
(MU of wealth) than wealthy people. If anything, the opportunity cost of time would be greater for
ECON 171
Problem Set 5
Prof. Levkoff
Part I. Evaluate the validity of each of the following statements.
a) If an individual is risk averse, then that individual will not accept a fair gamble if given
the opportunity.
b) The argument that a uniform fine fo
ECON 171
Prof. Levkoff
Problem Set 6:
Part I. Evaluate the validity of each of the following statements. Be sure to clearly
accompany your explanation using graphs and equations where appropriate.
a) In a mixed strategy Nash equilibrium, a player must be
ECON 171
Prof. Levkoff
Problem Set 2
Part I. Evaluate the validity of each of the following statements.
a) If two random variables X and Y have expected values and covariance of zero, then the
expected value of the random variable Z=XY must be zero.
b) It
ECON 171
Problem Set 4
Prof. Levkoff
Part I. Evaluate the validity of each of the following statements.
a) The same signal to two individuals can result in both homogenous and asymmetric
information.
b) An increase in the precision of a signal will increa
ECON 171
Prof. Levkoff
Problem Set 3
Part I. Evaluate the validity of each of the following statements.
a) If two events are mutually exclusive and exhaustive, then they cannot be conditioned on one
another using information about one of the events occurr
Economics 171
Problem Set 3 Solutions
S. Levkoff
Part I
a) False. If the events are mutually exclusive and exhaustive, then knowing that one has occurred
provided a PERFECT signal that the other had not.
b)
Economics 171
Problem Set 3 Solutions
Part II
1.
ECON 171
Prof. Levkoff
Problem Set 1
Part I. Evaluate the validity of each of the following statements.
a) CDFs can be downward sloping.
b) The variance is a special case of the covariance.
c) For a continuous random variable, the probability that the var
More Conditional Probability,
Information, and Signals
S. Levkoff
ECON 171
Confusing Conditional
Probabilities
A sample of doctors across the US were
asked the following question:
Results
More than 50% of the doctors answered
that there would be a 95% cha