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Glossary


A B C D E F G H I J K L M N O P Q R S T U V W X Y Z (Show all)

UL Literature

Autorenkollektiv (1997), Bogart (1985), Funk & Stoer (1997), Hausmeister (1952), Lotterbottel (1983)


 

Source: SFB 504

ultimatum game

An experiment. There are two players, an allocator A and a recipient R, who in the experiment do not know one another. They have received a windfall, e.g., of $1. The allocator, moving first, proposes to split the windfall by proposing to take share x, so that A receives x and R receives 1-x. The recipient can accept this allocation, or reject it in which case both get nothing. The subgame perfect equilibrium outcome is that A would offer the smallest possible amount to R, e.g., the share $.99 for A and $.01 for R, and that the recipient should accept. The experimental evidence, however, is that A offers a relatively large share to R, often 50-50, and that R would often reject smaller positive amounts. We may interpret R's behavior has willingness to pay a cost to punish "unfair" splits. With regard to A's behavior -- does A care about fairness too? Or is A income-maximizing given R's likely behavior? See also Dictator Game.

Source: econterms

unbalanced data

In a panel data set, there are observations across cross-section units (e.g. individuals or firms), and across time periods. Often such a data set can be represented by a completely filled in matrix of N units and T periods. In the "unbalanced data" case, however, the number of observations per time period varies. (Equivalently one might say that the number of observations per unit is not always the same.) One might handle this by letting T be the total number of time periods and Nt be the number of observations in each period.

Source: econterms

unbiased

An estimator b of a distribution's parameter B is unbiased if the mean of b's sampling distribution is B. Formally, if: E[b] = B.

Source: econterms

uncertainty

If outcomes will occur with a probability that cannot even be estimated, the decisionmaker faces uncertainty. Contrast risk.

This meaning to uncertainty is attributed to Frank Knight, and is sometimes referred to as Knightian uncertainty.

The decisionmaker can apply game theory even in such a circumstance, e.g. the choice of a dominant strategy.

Kreps (1988), p 31, writes that three standard ways of modeling choices made under conditions of uncertainty are with von Neumann-Morgenstern expected utility over objective uncertainty, the Savage axioms for modeling subjective uncertainty, and the Anscombe-Aumann theory which is a middle course between them.

A recent ad for a new book edited by Haim Levy (Stochastic Dominance: Investment Decision Making under Uncertainty) considers three ways of modeling investment choices under uncertainty: by tradeoffs between mean and variance, by choices made by stochastic dominance, and non-expected utility approaches using prospect theory.

Source: econterms

uncorrelated

Two random variables X and Y are uncorrelated if E(XY)=E(X)E(y). Note that this does not guarantee they are independent.

Source: econterms

under the null

Means "assuming the hypothesis being tested is true."

Source: econterms

unemployment

The state of an individual looking for a paying job but not having one.
Does not include full-time students, the retired, children, or those not actively looking for a paying job.

Source: econterms

uniform distribution

A continuous distribution over a range which we will denote [a,b]. Pdf is (x-a)/(b-a). Mean is .5*(a+b). Variance is (1/12)(b-a)2.

Source: econterms

uniform kernel

The uniform kernel function is 1/2, for -1<u<1 and zero outside that range. Here u=(x-xi)/h, where h is the window width and xi are the values of the independent variable in the data, and x is the value of the independent variable for which one seeks an estimate. Unlike most kernel functions this one is unbounded in the x direction; so every data point will be brought into every estimate in theory, although outside three standard deviations they make hardly any difference.
For kernel estimation.

Source: econterms

uniform weak law of large numbers

See Wooldridge chapter, p 2651. The UWLLN applies to a non-random criterion function qt(wt,q), if the sample average of qt() for a sample {wt} from a random time series is a consistent estimator for E(qt()).

A law like this is proved with Chebyshev's inequality.

Source: econterms

union threat model

"Firms may find it profitable to pay wages above the market clearing level to try to prevent unionization." In a model this could lead to job rationing and unemployment, just as efficiency wage models can.

Source: econterms

unit root

An attribute of a statistical model of a time series whose autoregressive parameter is one. In a data series y[t] modeled by:
y[t+1] = y[t] + other terms
the series y[] has a unit root.

Source: econterms

unit root test

A statistical test for the proposition that in a autoregressive statistical model of a time series, the autoregressive parameter is one. In a data series y[t], where t a whole number, modeled by:
y[t+1] = ay[t] + other terms
where a is an unknown constant, a unit root test would be a test of the hypothesis that a=1, usually against the alternative that |a|<1.

Source: econterms

unity

A synonym for the number 'one'.

Source: econterms

univariate

A discrete choice model in which the choice is made from a one-dimensional set is said to be a univariate discrete choice model.

Source: econterms

univariate binary model

For dependent variable yi that can be only one or zero, and a continuous indepdendent scalar variable xi, that:
Pr(yi=1)=F(xi'b)
Here b is a parameter to be estimated, and F is a distribution function. See probit and logit models for examples.

Source: econterms

unrestricted estimate

An estimate of parameters taken without constraining the parameters. See "restricted estimate."

Source: econterms

upper hemicontinuous

no disappearing points.

Source: econterms

urban ghetto

As commonly defined by U.S. researchers: areas where 40 percent or more of residents are poor.

Source: econterms

utilitarianism

A moral philosophy, generally operating on the principle that the utility (happiness or satisfaction) of different people can not only be measured but also meaningfully summed over people and that utility comparisons between people are meaningful. That makes it possible to achieve a well-defined societal optimum in allocations, production, and other decisions, and achieve the goal utilitarian British philosopher Jeremy Bentham described as "the greatest good for the greatest number."

This form of utilitarianism is thought of as extreme, now, partly because it is widely believed that there exists no generally acceptable way of summing utilities across people and comparing between them. Utility functions that can be compared and summed arithmetically are cardinal utility functions; utility functions that only represent the choices that would be made by an individual are ordinal.

Source: econterms

utility

utility is the internal satisfaction that a person acts to optimize

utility curve

synonym for indifference curve.

Source: econterms

Utility expected utility

The concept of utility enters economic analysis typically via the concept of a utility function which itself is just a mathematical representation of an individualīs preferences over alternative bundels of consumption goods (or, more generally, over goods, services, and leisure). If the individualīs preferences are complete, reflexive, transitive, and continuous, then they can be represented by a continuous utility function. In this sense, utility itself is an almost empty concept: It is just a number associated with some consumption bundle. A general treatment of the existence of an utility function is due to Debreu (1964).

Source: SFB 504

UVAR

Unstructured VAR (Vector Autoregression)

Source: econterms

UWLLN

Uniform weak law of large numbers

Source: econterms

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