Econ Exam (Lecture 5 till end)

Question 1

For a Grand Coalition, whit is the characteristic function?

Answer 1

The maximum joint return for all member

Question 2

When does an agent have advantage in Multi-Person Cooperative Games with Transferrable Utility?

Answer 2

When the agent is the fewest of its kind it has the advantage as it can increase the others agents willingness to transfer utility with them

Question 3

What does an endowment represent in a Multi-Cooperative Game without Transferrable Utility?

Answer 3

The endowment of goods that each player starts with represents the security level of each player

Question 4

When is an allocation of goods said to be feasible in a Multi-Cooperative Game without Transferrable Utility?

Answer 4

An allocation of goods is said to be feasible when it adds up to the sum of endowments

Question 5

What do the axes on an Edgeworth Bowley Box represent?

Answer 5

These represent the amounts of good 1 and 2 that a player can receive

Question 6

Describe the limit proposition

Answer 6

As the amount of players tends towards infinity, the number of allocations in the core tend to just one

Question 7

Describe the Walrasian Auction, in which equilibrium prices can be reached by trial and error

Answer 7

Suppose the existence of an auctioneer
Each agent calculates its demand for a good at every possible price
Auctioneer chooses price that equates to the total demand
Prices are implemented and trade takes place at these prices