Experimental Identification of the Preference Effect

The below was a term paper for Dr. Stratmann’s ECON 895, “Empirical Micro Economics,” also known as Microeconometrics, Fall 2016 at GMU. The figures referenced are in the Word document but not in the website article. Download the Word document here. It’s better formatted anyway I think. Abstract Prices, the distribution of income, and individual … Read more

Summing Budget Lines Does Not Derive the Demand Curve

It’s a common exercise in undergraduate economics to sum individual budget constraints to derive a market demand curve, but this is wrong. Budget constraints are immune to changes in individual preference, but demand is not. Budget constraints do not include economic cost, but quantities demanded do include preference and economic cost information (see point 5) … Read more

Assigning Explanation Under Simultaneous Price and Preference Shifts

This article is part 2 of 4 in a series on the preference elasticity of demand. This article will include the following: Gains to Utility from Preference Shift Identify the Preference-Substitution Effect Identify the Preference-Income Effect Simultaneous Price and Preference Shift Total Quantity Explained by Factor The subsequent article will refine the explanatory assignment using … Read more

The Preference Elasticity of Demand: Overview and Motivation

Standard microeconomics includes a discussion on the Hicksian demand curve. This article extends a similar analysis to establish a post-Beckerian framework for the analysis of preference change. A big shoutout to Desmos which was used to create all of the graphs this post will contain. The series will proceed as follows: Overview and Motivation Assigning … Read more

Nash Equilibrium and the Prisoners’ Dilemma

This article will introduce Nash Equilibrium and the Prisoners’ Dilemma. I will argue that prima facie these provide proof that empathetic markets can produce Nash-Superior equilibria. Let me start off by saying Khan Academy is super awesome. See their short introductory video on Nash Equilibrium and the Prisoners’ Dilemma: First thoughts: The PD does not … Read more