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badger comments on The Best Textbooks on Every Subject - Less Wrong

167 Post author: lukeprog 16 January 2011 08:30AM

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Comment author: jsalvatier 28 April 2011 10:02:26PM 1 point [-]

I'd like to request a book on Mathematical Economics that teaches you the basics of building and solving utility based microeconomic models (without strategic behavior).

Comment author: badger 28 April 2011 10:27:15PM 1 point [-]

Could you clarify what you are looking for? When I think of mathematical micro models without strategic behavior, my mind goes to general equilibrium models with a continuum of agents. Your use of 'building' suggests you are thinking of something else though.

Comment author: jsalvatier 28 April 2011 10:49:49PM 0 points [-]

That actually sounds like exactly what I want. Can you clarify why 'building' indicates otherwise? I meant 'building' as in 'constructing'.

Comment author: badger 29 April 2011 01:08:25PM 2 points [-]

Since most economists think the Arrow-Debreu model is essentially synonymous with general equilibrium, it just seems odd to talk about building models. If you are thinking of 'model' as a description of a particular economy rather than as a general framework, there are books on computable general equilibrium, but I can't give any particular recommendations.

If you are looking for standard GE theory, look at Existence and Optimality of General Equilibrium by Aliprantis, Burkinshaw, and Brown. It is currently very cheap used on Amazon. There is also a companion book with all the end-of-chapter problems and solutions.

I think I was projecting my skepticism of GE models onto you, assuming that couldn't be what you are really asking for. I'm not sure what theorems about complete-market economies tell us about the real world. There are GE models with incomplete markets, but they involve differential topology beyond my grasp.

Comment author: jsalvatier 29 April 2011 03:21:35PM 0 points [-]

OK, I guess I had in mind something significantly simpler. I am trying to build a model for gaining and sharing understanding. Therefore, I require analytic solutions or another way of characterizing the behavior of the model.

Here's the problem I am trying to model. I want to model a multiple period monetary economy with money treated as a good and couple of other goods and monetary trade only. I am trying to model a minimal interesting model of this sort, so I don't fundamentally care how many agents or other goods there are. I guess the model will probably have two representative agents, and two goods. My model should be 'general equilibrium' in the sense that it is modeling the whole economy, but obviously doesn't need to have remotely complete markets. This seems like it should be possible to do without getting into anything especially fancy, but perhaps I misunderstand.

Do you have any advice?

Comment author: badger 30 April 2011 02:23:16AM 2 points [-]

Alright, hopefully I can give useful recommendations by this point...

Varian's Microeconomic Analysis is probably the best to learn the basics of consumer theory and GE analysis. Since these models don't have any frictions, there isn't any role for money. If you are interested in monetary models, try looking through Kiyotaki and Wright's On Money as a Medium of Exchange or Shapley and Shubik's Trade Using One Commodity as a Means of Payment. These are relatively accessible micro-founded models that should give you an idea of where to head, even if they don't make complete sense now. I don't think models like these have percolated into any textbooks yet.

Comment author: jsalvatier 30 April 2011 10:12:26PM 0 points [-]

OK, thanks! Those are all helpful suggestions.