Everyone using the service of the Tbilisi marshrutkas experiences one of two extreme cases: the marshutka either moves tantalizingly slowly or excessively fast. How can this apparent paradox be explained? In search for an answer, let us turn to game theory, one of the appealing outgrows of mathematical economics.
GAME THEORY IN ACTION
A game is a situation in which different parties, usually called players, independently make decisions. Unlike in a unilateral decision problem, in a game the payoff of each player depends on the actions taken by himself an...
ISET Economist Blog
A blog about economics in the South Caucasus.
Jul
22
Jul
05
In 1122, King David IV. reconquered Tbilisi from the Muslims. In those times, a bloodbath among the former oppressors would have been the logical consequence of such a victory. Leaders of the High Middle Ages took merciless revenge against their enemies once they had defeated them. Yet David did not! To the contrary, he did not only let the former rulers live, but David was even anxious that the Muslim population might leave Tbilisi after the fall of the city. In order to send a strong signal of appreciation and friendship to the Muslim population, he ex...
Jun
03
Cultural and intellectual achievements herald economic success of a people, and the Chinese cultural and intellectual heritage is breathtaking. The Chinese discovered gunpowder, the compass, and the movable type printing press long before the Europeans. Admiral Zheng He’s fleet reached Mogadishu and Mombasa with up to 28,000 sailors at the same time when the Europeans set out to discover Africa with crews of not more than 300 sailors. Temporarily lamed by Mao and his followers, capitalism has unleashed the dragon once again! China is about to become the ...
May
27
It is an empirical fact that in market economies the economic activity shows cyclical patterns. The 19th century French economist Clement Juglar is generally attributed with having formulated the first coherent theory of what are known as business cycles. According to Juglar, the cyclical fluctuations are caused through lags in the adjustment of production.
In a market economy, there is no central planner with a birds-eye view on the whole economic system. Rather, what is produced in the economy is decided in an entirely decentralized manner through the ...
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