19 Matching Annotations
  1. Dec 2019
    1. Nash proved that if we allow mixed strategies, then every game with a finite number of players in which each player can choose from finitely many pure strategies has at least one Nash equilibrium.

      It always has at least one Nash equilibrium (but it may only be a NE in mixed strategies).

    1. More volatile underlying assets will translate to higher options premiums, because with volatility there is a greater probability that the options will end up in-the-money at expiration.

      That's interesting

    1. The option is European and can only be exercised at expiration.No dividends are paid out during the life of the option.Markets are efficient (i.e., market movements cannot be predicted).There are no transaction costs in buying the option.The risk-free rate and volatility of the underlying are known and constant.The returns on the underlying are normally distributed.

      Some of the assumptions underlying the Black-Scholes model. Do these limit its realism and predictive power?

    1. In low-income countries the vast majority are unwilling to pay for effective drugs simply because they are unable to pay. Low-income nations need more price discrimination—and vastly lower prices—if they are ever to afford the world's most effective medicines.

      Does price discrimination help poor countries here? Which countries have more price-inelastic demand? Does PD increase social welfare for this case?

    1. She found a German seller offering packs of the same nappies she buys in Luxembourg for the same price she normally pays. Looking more closely at the unit price, however, Nadine realised that the German packs contained 140 nappies, whereas the packs in Luxembourg had only 90, making them much more expensive. She switched straight away to buying all her nappies from the German shop.

      If this was price discrimination... which country's consumers likely had the higher price elasticity?

    1. I think that the preservation of these documents could be seen as providing pure public good. We value that these have been preserved for posterity even if we don't visit the Magna Carta ourselves. What do you think?

  2. Nov 2019
    1. Holt, C., and S. Laury (2002), Risk Aversion and Incentive Effects, American Economic Review, v. 92 (5): 1644-1655. Crosetto, Paolo, and Antonio Filippin. “A theoretical and experimental appraisal of four risk elicitation methods.” Experimental Economics 19, no. 3 (2016): 613-641. Pedroni, Andreas, Renato Frey, Adrian Bruhin, Gilles Dutilh, Ralph Hertwig, and Jörg Rieskamp. “The risk elicitation puzzle.” Nature Human Behaviour 1, no. 11 (2017): 803.

      These are worth looking at closely and discussing

    1. Two statistics about reducing your risk of an early death made headlines around the world recently. The first seems to be a great reason to add a four-legged friend to your life. It suggests that owning a dog is tied to lowering your chance of dying early by nearly a quarter. The second statistic claims that even a minimal amount of running is linked to reducing your risk of premature death by up to 30%. Ruth Alexander finds out what’s behind these numbers and we hear from epidemiologist, Gideon Meyerowitz-Katz.

      It's amazing that statistics like these... (seemingly without even minimal obvious controls for age etc.) get reported so naively in the media. Note that one of the interviewees suggests one approach that would provide evidence on the impact of pets on longevity ... random dog assignment. He seems to doubt the health benefits; I don't know, it seems plausible to me, but I'd like to see some real evidence.

    1. 2018 final exam with suggested answer guidelines

      I just put this up ... last year's final exam with suggested answer guidelines

    1. For problem 6 I'll award 1.5 marks for "CD" even though it's not correct. But I admit you need to look at the wording of this question carefully