Volume 3 • Issue 1 | March 2019
Use of Symmetries in Economics: An Overview
Vladik Kreinovich, Olga Kosheleva, Nguyen Ngoc Thach, Nguyen Duc Trung
Additivity
Armax
CobbDouglas formula
Gravity model for trade
Nash’s bargaining solution
Optimism pessimism criterion
Probabistic decision making
Shift-invariance
Symmetry
Abstract:
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, 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