Some Theoretical Aspect of Equilibrium in Behavioral Economics

H. Kowgier ()
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H. Kowgier: University of Szczecin

Chapter Chapter 5 in Problems, Methods and Tools in Experimental and Behavioral Economics, 2018, pp 61-76 from Springer

Abstract: Abstract Behavioral economics is closely related to the theoretical aspects that result from it. An especially important aspect is the problem of equilibrium. Experience shows that stock market investors often behave irrationally. Nevertheless, it was noted that in the long term, their activity is related to the equilibrium surface, which is a rotary cone. The chapter shows how using the method of least squares you can get a spiral line of the vector $$ [q_{i} ,p_{i} ,t_{i} ] $$ (pi—means the price of the ith good, qi—means the amount of the ith good, ti—time characterizing a certain economic process) using a hyperbolic spiral which in space creates a equilibrium surface that is a cone. Having a general solution, we can experiment by adopting certain values that are coordinates of the vector, $$ [q_{i} ,p_{i} ,t_{i} ] $$ , obtaining different cones of economic equilibrium. An important tool used in behavioral economics is game theory. The stock market can be treated as a game without the possibility of concluding a coalition. The chapter shows how to find the stock exchange state number, knowing the stock exchange information matrix and vice versa, how to find the state form of the stock exchange, knowing the stock market state number. In addition, the matrix boundary for the stock market is given, which is also the equilibrium matrix for the ideal economy. According to E. Noether’s theorem, certain principles of conservation are associated with every symmetry. There is no equilibrium without symmetry. The third part of the work presents the problem of symmetry of economic quantities using the Shubnikov method. In addition, this chapter discusses the symmetry groups of some of the equilibrium surfaces encountered in economics.

Keywords: Method of least squares; Equilibrium surfaces; Symmetry of economic quantities; Stock market; E. Noether’s theorem; Hyperbolic spiral; The W. Shubnikov method (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/978-3-319-99187-0_5

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