tailieunhanh - Use of symmetries in economics: An overview

In this paper, we show that many semi-heuristic econometric formulas can be derived from the natural symmetry requirements. The list of such formulas includes many famous formulas provided by Nobelprize winners, such as Hurwicz optimism-pessimism criterion for decision making under uncertainty. | 20 Asian Journal of Economics and Banking 2019 03 01 20-39 tRUỜv Asian Journal of Economics and Banking ISSN 2588-1396 http Home Use of Symmetries in Economics An Overview Vladik Kreinovich1 Olga Kosheleva1 Nguyen Ngoc Thach2 and Nguyen Duc Trung2 1University of Texas at El Paso El Paso Texas 79968 USA 2Banking University HCMC Ho Chi Minh City Vietnam Article Info Abstract Received 25 01 2019 Accepted 12 02 2019 Available online In Press Keywords Additivity Armax Cobb-Douglas formula Gravity model for trade Nash s bargaining solution Optimism pessimism criterion Probabistic decision making Shift-invariance Symmetry In this paper we show that many semi-heuristic econometric formulas can be derived from the natural symmetry requirements. The list of such formulas includes many famous formulas provided by Nobel-prize winners such as Hurwicz optimism-pessimism criterion for decision making under uncertainty McFadden s formula for probabilistic decision making Nash s formula for bargaining solution - as well as Cobb-Douglas formula for production gravity model for trade etc. JEL classification C10 C18 C44 C51 D71 D81 F17 1 Corresponding author Vladik Kreinovich University of Texas at El Paso El Paso Texas 79968 USA. Email address vladik@ Vladik Kreinovich et al. Use of Symmetries in Economics An Overview 21 1 WHY SYMMETRIES How do people make predictions How do people make predictions How did people know that the Sun will rise in the morning that a poisonous snake can bite and its bite can be deadly Because in the past the sun was always rising because in the past snakes would sometimes bite and the bitten person would sometimes die. In all these cases to make a prediction we look at similar situations in the past - and make predictions based on what happened in such situations. Some predictions are more complicated than that - they are based on using formulas equations and physical laws. But how do we know that a formula - . Ohm s law - is .