Solomon Geleta

Assistant Prof. of Agricultural Economics @Lincoln University

[Solomon Geleta @Slmnhg]

The magical #NotebookLM-on mechanism design: Mechanism design is often called “reverse game theory.” Instead of predicting outcomes, economists design rules that encourage self-interested individuals to truthfully reveal their private information, to achieve efficient and socially desirable outcomes. Concepts such as incentive compatibility, the revelation principle, and the VCG mechanism guide this process, though trade-offs arise because private information can generate information rents and allocative distortions. https://t.co/NPBWQF9PWn

[International and Monetary Economics Network @int_mon_econ]

Edmund Phelps, RIP

A giant of macroeconomics has left us. Here is a post by Olivier Blanchard: https://t.co/Iic4EJHqna

One of his many influential contributions: Phillips Curves, Expectations of Inflation and Optimal Unemployment over Time:

https://t.co/NJ0JFgxOqL

In his book, "My Journeys in Economic Theory," Edmund Phelps "tells the story of his role in reshaping economic theory, offering a powerful personal account of a creative and rewarding career."

"At its core, this book shares the joy of intellectual achievement: the excitement of coming up with a new idea that radically departs from prevailing views and the satisfaction of exercising one’s own ingenuity instead of applying or developing others’ models. Telling the story of a life packed with intellectual adventure, My Journeys in Economic Theory provides a profound vision of a dynamic, modern economy that offers lives rich with creativity and meaning."

https://t.co/KM8gMAeqjr

[Solomon Geleta @Slmnhg]

A Conversation with John Maynard AI Keynes, about AI, generated by AI | ... https://t.co/6coRESsWVd via @YouTube

[Solomon Geleta @Slmnhg]

MICROECONOMIC THEORY (TOPIC XIV):General Equilibrium Theory
GE Theory examines how all prices and quantities are simultaneously determined across markets. Core requirements include firm profit maximization, consumer utility maximization, and market clearing. Unlike partial equilibrium, GE accounts for economy-wide feedback effects. Concepts: Walras' Law, Edgeworth box, and efficiency conditions (MRTS, MRT). #GeneralEquilibrium #EconomicTheory #Microeconomics #WalrasianEquilibrium
https://t.co/P8vhlnXB8v

[Solomon Geleta @Slmnhg]

MICROECONOMIC THEORY (TOPIC XIII): Moral Hazard & Incentive Design
Principal-Agent Framework where agents' actions are hidden. Optimal contracts must balance efficient risk sharing against incentive provision. First-Best (observable effort) vs. Second-Best (hidden effort) creates trade-offs. Applications include sharecropping, labor contracts, and insurance--showing why institutional designs respond to unobservable effort. #moralhazard #principalagent #contracttheory #incentives #gametheory #InstitutionalEconomics
Source: Mas-Colell, Andreu, Michael Dennis Whinston, and Jerry R. Green. Microeconomic theory,1995
https://t.co/ckp42deiRB

[Solomon Geleta @Slmnhg]

MICROECONOMIC THEORY (TOPIC XII): Adverse Selection, Signaling & Screening
Information asymmetry causes market inefficiencies and breakdown (Akerlof's Lemons Model). Two solutions: Signaling (informed agent acts first, e.g., certification) and Screening (uninformed principal offers contract menu to induce self-selection). Efficiency losses require policy interventions. #adverseselection #signaling #screening #Informationasymmetry #contracttheory #MarketFailure #gametheory
Based on:: Mas-Colell, Andreu, Michael Dennis Whinston, and Jerry R. Green. Microeconomic theory,1995
https://t.co/c3wq5lFEfS

[Solomon Geleta @Slmnhg]

MICROECONOMIC THEORY (TOPIC XI) Market Power: Monopoly & Oligopoly
Analysis of how firms exercise market power beyond perfect competition. Monopolies maximize profit (MR=MC), creating higher prices, lower output, and deadweight loss. The Lerner index measures markup power via demand elasticity. Oligopolies compete through quantity (Cournot) or price (Bertrand), with outcomes shaped by repeated interaction and entry barriers. #economics #marketPower #monopoly #oligopoly #gameTheory #competitionpolicy Source: Mas-Colell, Andreu, Michael Dennis Whinston, and Jerry R. Green. Microeconomic theory,1995
https://t.co/uxJmuv7Qcb

[Math Cafe @Riazi_Cafe_en]

U Waterloo's "Calculus 1 for Honors Mathematics" course notes

PDF: https://t.co/BS289MJAsO

[Math Cafe @Riazi_Cafe_en]

Arizona's "Principles and Methods of Applied Mathematics"

PDF: https://t.co/cPDYpfGHpn

[Thomas Drechsel @td_econ]

Check out this interesting collection of essays about central bank independence. From a fantastic recent conference at the Peterson Institute @PIIE @AdamPosen

https://t.co/veaeVrHTkM

[Barry Eichengreen @B_Eichengreen]

IMF Advice on Fiscal Policy: Background Papers https://t.co/VcI036UvE5

[Econometrica @ecmaEditors]

A model of repeated games under non-probabilistic uncertainty: today's action must be chosen without knowing what tomorrow's stage game will be. So infinite-horizon payoffs are indeterminate. Can we still identify what equilibrium outcomes are possible? https://t.co/LwmH4e8OkG

[Solomon Geleta @Slmnhg]

Miscellany X: US Finance
U.S. finance expanded rapidly from 1980–2006, then stabilized around 7% of GDP. Since the Global Financial Crisis, the system has shifted toward a more market-based structure, with growth in high-fee securities activities and credit moving from banks to nonbank intermediaries--raising concerns about long-term stability and efficiency. #USFinance #financialmarkets #marketbasedfinance #nonbankfinance #shadowbanking #securitization
Source: Greenwood, R., Ialenti, R., & Scharfstein, D. (2025). The evolution of financial services in the United States. Annual Review of Financial Economics, 17, 189–206
https://t.co/H3M6Avu2fG

[Solomon Geleta @Slmnhg]

MICROECONOMIC THEORY (TOPIC X): Externalities and Public Goods
Externalities and public goods cause market failure by breaking the link between private and social incentives. Pigouvian taxes, subsidies, or property rights (Coase) can internalize externalities, while efficient public goods provision follows the Samuelson Condition, highlighting the need for targeted policy intervention. #externalities #publicgoods #pigouviantaxesSource: Mas-Colell, Andreu, Michael Dennis Whinston, and Jerry R. Green. Microeconomic theory,1995
https://t.co/CJxYWICp5N

[Solomon Geleta @Slmnhg]

MICROECONOMIC THEORY (TOPIC IX):Competitive Markets: Efficiency, Welfare, and Intervention
Competitive (Walrasian) markets aggregate price-taking behavior into market-clearing equilibria. These outcomes are Pareto efficient, as shown by the First and Second Welfare Theorems, which separate efficiency from equity. Policy interventions like taxes or price controls distort this benchmark and generate deadweight loss. #walrasianequilibrium #paretoefficiency #welfaretheorems #efficiency #deadweightLoss #marketIntervention Source: Mas-Colell, Andreu, Michael Dennis Whinston, and Jerry R. Green. Microeconomic theory,1995
https://t.co/vN89w5gRo9

[Solomon Geleta @Slmnhg]

MICROECONOMIC THEORY (TOPIC VIII): Strategic Sequences: Subgame Perfection and Repeated Play
Dynamic (extensive-form) games model sequential decisions and information over time. Subgame-Perfect Equilibrium, derived via backward induction, rules out non-credible threats. In repeated games, cooperation fails in finite horizons but can be sustained indefinitely through punishment strategies, as captured by the Folk Theorem--highlighting how long-term incentives shape strategic behavior. #gametheory #extensiveformgames #subgameperfectequilibrium #backwardinduction #repeatedgames #folktheorem
Source: Mas-Colell, Andreu, Michael Dennis Whinston, and Jerry R. Green. Microeconomic theory,1995. https://t.co/QvyNVkGKH7

[Solomon Geleta @Slmnhg]

Miscellany IX: The Prisoner's Dilemma of the AGI Race
A 2025 RAND report models the US-China AGI race as a Prisoner's Dilemma: without international coordination, nations will dangerously accelerate development despite catastrophic risks. The fix? Create mechanisms that make cooperation more rewarding than racing ahead alone. #gametheory #microeconomics #AGIprisonersDilemma
Source: Abraham, L., Kavner, J., & Moon, A. (2025). A prisoner's dilemma in the race to artificial general intelligence. RAND Corporation. https://t.co/8mp0we7Pib

[Solomon Geleta @Slmnhg]

MICROECONOMIC THEORY (TOPIC VII)-Strategic Prediction in Simultaneous-Move Games
Players choose actions at the same time without observing rivals. Inferior strategies are removed through dominance and rationalizability. The core concept is Nash Equilibrium--no Player gains by deviating alone. With private information (Incomplete Information), players have types (e.g., costs, valuations). Strategies map types to actions, leading to Bayesian Nash Equilibrium, where each player maximizes expected payoffs given beliefs about others’ types. #StrategicPrediction #SimultaneousMoveGamesBased on: Mas-Colell, Andreu, Michael Dennis Whinston, and Jerry R. Green. Microeconomic theory. 1995. https://t.co/PXtRyS1wXJ

[Solomon Geleta @Slmnhg]

Miscellany VIII: A Price Tag for Power
Kohlberg and Neyman create a "value" measure that calculates each player's worth in strategic games based on their threats and bargaining power. They provide a simple formula using weighted averages. Their approach accounts for the cost of making threats and applies to scenarios as bribery, competition, and information value. #CooperativeGames #Economics #StrategicThinking #BargainingPower
Source: Kohlberg, E., & Neyman, A. (2021). Cooperative strategic games. Theoretical Economics, 16(3), 825-851. https://t.co/zZ4vIPGEOD