muzna, OLG question in 2012 fall prelim

[Doosoo Kim]

do you remember you asked me if we should devide s_t by the mass of surviving population..

i guess we figured it out today.

"s_t" is savings per worker in the period t. 

after they make saving s_t, some of them die.

But still, the total amount of aggregate saving remains the same and this saving will be used as capital factor in production process in period t+1.

So in aggregate terms,

we have S_t=K_t+1.

k_(t+1) is capital per worker in the period t+1. 

since we have exactly the same mass of young worker every period, we get s_t=k_t+1

Does it make sense?

:D 

Best,

Doosoo

[riju joshi]

Dooo

In the question that we did in the class today, micro class, the pooling equilibrium in which player one plays R always, and in response player plays'd'.

If player one deviates to playing L when she is of type two, then isn't she earning a payoff of 3 (as opposed to playing R according took equilibrium strategy) and thus has an incentive to deviate?
Because player two is always going too play 'd'?

Please reply sooooooooooonnn :( :( :( :(

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[Doosoo Kim]

Noooo~ 

in the pooling eqm, 2 plays u if 1 plays L and plays d when 1 plays R. 

To have this.. we needed the belief q>1/3 remember?

 

[riju joshi]

OK. Then how's do we rule out polling equilibrium when player one always plays L ?
Can't we have belief system that is consortium with this?

[riju joshi]

Let me check. Hold on.

[riju joshi]

Doo...its okay! Annie explained it to me!
GO ANNIE!!