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Economics

Conceptual Framework of Economics
by

Alfonso Then

on 4 June 2014

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Transcript of Economics

ECONOMY
a system of resource allocation by social mechanisms
for the reproduction of the opportunity value among the agents of a population

TYPE SPACE
OUTCOME SPACE
Supermodularity (profit) / Submodularity (cost)
Growth / Sustainability
Innovation / Stability
Efficiency / Equality
Specialization / Integration
Autonomy / Control
Capability / Employment
INTERACTIONS SPACE
POPULATION / ECOSYSTEM
A set T of observable parameters or signals t, which are verified privately for each agent i=1,2,...,n, and determine his/her internal (competencies, expectations, preferences, ...) and external (a set S of possible actions) behaviors
LEVEL: MACRO -> MiCRO
STRUCTURE: NETWORK, EVOLUTIONARY, UNBOUNDED
T
Axioms of Behavior and Rationality,
Representation Theorems *
A
G
E
N
T
S

º
... t(n)
T(n)
S(n)
S(2)
T(2)
t(2)
S(1)
T(1)
t(1)
S(1) x S(2) x...x S(n)
s(1)
s(2)
... s(n)
x = f(t)
= g(s)

X
R
E
S
O
U
R
C
E
S

M,g
TRANSFORMATION
FORCES
FLOWS
TRANSFORMATION
Transaction Costs
Opportunity Costs
(Im)Posibility Theorems y Mechanisms Design
(Revelation Principle, Incentive Compatibility, Truthful Implementation)
G(M,g,s)
Opportunity Value *
E
N
T
R
O
P
Y

E
N
E
R
G
Y

Equilibrium Theorems & Other Solution Concepts
Welfare Theorems y Theories of Growth,
Fluctuations & Regulation.
Microfoundations. Lucas Critique
Coase Theorem
u(i)[x, t(i) ]
"Social" Choice
f
M o g
Y
i = 1,2,...,n
Direct & Collateral (Externalities)
LEVEL: MiCRO -> MiCRO
STRUCTURE: DYNAMIC, INTERACTIVE
Opportunities time k
...
Opportunities
time 3
Opportunities
time 2
Opportunities time 1
Growth
LEVEL: MiCRO -> MACRO
STRUCTURE: DYNAMIC, EMERGENT, BOUNDED
U
N
L
I
M
I
T
E
D

W
A
N
T
S
/
N
E
E
D
S

L
I
M
I
T
E
D

C
A
P
A
B
I
L
I
T
I
E
S
A social mechanism (M, g) reveals through an incentive scheme M (by design or not) the profile of agents types t(i) by s or directly. This revelation induces a sequence of interactions g over a set of resources. The solution or convergence of that sequence, G(M, g, s), is equivalent to an implementation of a social choice function f(t) for that profile in a space of possible outcomes X
Reciprocation
Transactions
Transfers
Stable Patterns of
Transaction:
Culture
Contracts
Organizations
M
g
Competitive Games
Anarchies, Jungle, Tournaments
Coalition Games
Homoarchies, Tribes, Clans, Nations
Negotiation Games
Autarchies, Markets
Coordination Games
Hierarchies, Bureaucracies
Incentives -> Revelation
Coordination -> Consequences
Indirect Revelation
Mutation (current, new)
Reputation
Relationship
Direct Revelation
Votation
Matching
Prices
Posting
Bargains
Auctions
sync + conv
Decentralized
Centralized
"
Natural
"
Selection




Consumption
Exchange
Production
Consumption
Exchange
Production
Distribution
Distribution
PRINCIPLES OF LIMITATION & ATTRACTIVENESS OF RESOURCES

CHOICE BASED:
Availability ∙ Diversity ∙ Divisibility ∙
Complementarity ∙ Sustitutability ∙ Convertibility ∙
Durability ∙ Madurity ∙
Exhaustiveness ∙ Renewability

TRANSACTION BASED:
Predictibility ∙
Transability ∙ Monetizability ∙ Reversibility ∙ Liquidity ∙ Sustainability ∙ Reusability ∙
Rivalry ∙ Exclusiveness ∙ Incentive Compatibility
What to produce?
For whom to produce?
How to produce?
What to produce?
For whom to produce?
How to produce?
Nature
Agents
Resources
Labor
Capital
Natural
Individuals
Households
Enterprises
Industries
Nations
World
Key Resources:
Knowledge
Time
Energy
Nature or resources could be model as unintentional agents
Consequences
Full transcript