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
01
In the globalized world of today, increasing national competitiveness has become an important policy target for any country. While engaging in mutually beneficial trade, technological and cultural exchanges, countries find themselves in a race for scarce mobile resources such as financial capital and talent. Winning in this race are those locations that offer the best conditions for economic activity – skilled and disciplined labor force, high quality services and urban amenities, transparent and efficient public administration, etc. These locations – no...
Jun
28
The Georgian economy faces many challenges, not least of which are access to finance and the extremely high cost of financing private enterprises. With the cost of borrowing (real interest rate) reaching 17.3% on average in April 2013, businesses find it very difficult to function, let alone invest in innovative technologies, long-term growth and development. These challenges can be directly traced to issues raised in one of the ISET Economist blogs: the Georgian financial industry is still very far from being a well-developed, efficiently functioning sy...
Jun
17
There has been a lively debate on current account (CA) imbalances around the world. Georgia is not an exception with its politicians and economists often complaining about Georgia’s current account deficits (see Figure 1) and discussing potential ways of reducing or even eliminating them without actually reasoning why one should do so. It seems that these people a priori assume that current account deficits are bad. But are CA deficits always bad? The answer will depend on a country’s specific circumstances and the reasons that give rise to them.
Let us ...
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 ...
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