ECO204Y1 Study Guide - Final Guide: Life Insurance, If And Only If, Longrun
4 Oct 2015
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Concepts related: list all concepts/ tools/ models that relate: represent the facts (including changes) of statement given. Graph (diagram, extensive form), numbers, optimization problem: analyze the model. Follow the logic: reflect upon your analysis and conclusion. Players participant in game w/ n active stragies, select by payoff. Strategies set of moves a player follows in game. Pay-offs motivation of player eg. , q, utility. Best-response best strategy to max payoff in response to other player strategies. Dominant strategy regardless what other players do, strategy earns largest payoff. Nash equilibrium no player has incentive to deviate, all playing br(br) Lr benefit (collusion) sr benefit (deviation) Punishment (off eq path) must be credible. Can be better off by being worse off. Economic agents decision makers in model, consumers, firms, gov choose tax, laws, max welfare. Rational preferences complete: x>y or y>x; transitive: x>y, y>z, x>z; continuous: no jumps in pref.
