Financial Economics · Behavioral FinanceWhat is Behavioral Finance?Traditional finance assumes investors are rational. Behavioral finance asks: what happens when they're not? The answer rewrites everything we thought we knew about markets.In 1987, global stock markets crashed by over 20% in a single day. Prices had not changed. No new information had arrived. No economic fundamentals had...
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Heteroskedasticity: What It Is, Why It Matters, and How to Fix It
Heteroskedasticity explained simply — your coefficients are still fine, but your standard errors are wrong. A beginner-friendly guide to what causes it, how to detect it with Breusch-Pagan and White tests, and how to fix it with robust standard errors and WLS. Includes the Preston curve case study and practice questions.
Dominant Strategy in Game Theory: Definition, Examples and How to Find It
Game Theory · StrategyDominant Strategy in Game TheoryThe clearest solution concept in game theory — when one strategy is always best, regardless of what anyone else does.In most strategic situations, the best thing to do depends heavily on what your opponent does. But sometimes — and this is what makes these situations especially powerful — one strategy is better than all others no matter what...
Instrumental Variables and Two-Stage Least Squares: Solving the Endogeneity Problem
Instrumental variables explained simply — why OLS gets it wrong, what a good instrument looks like, and how the Vietnam draft lottery revealed that military service actually hurts earnings. A beginner-friendly guide to IV and 2SLS with worked examples and practice questions.
Omitted Variable Bias: How to Predict the Direction Before You Run the Regression
The omitted variable bias formula, the sign table, and how to work out whether your coefficient is too big or too small before you touch the data. With worked examples from the returns-to-education literature.
Zero-Sum vs Non-Zero-Sum Games: Key Differences with Examples
Game Theory · Core ConceptsZero-Sum vs Non-Zero-Sum GamesOne of the most fundamental distinctions in game theory — and one that determines whether cooperation is even possible between rational players.When two people negotiate a salary, does one person's gain always come at the other's expense? When two firms compete for market share, is the winner's gain always the loser's loss? The answer in...
Fiscal Policy: Government Spending, Taxation, Multipliers, and the Debt Debate
Fiscal policy explained simply — multipliers, crowding out, Ricardian equivalence, and the austerity debate. A beginner-friendly guide to how government spending and taxation work, why Europe’s 2010 austerity programme hurt more than expected, and how to evaluate fiscal stimulus.
The Prisoner’s Dilemma Explained: The Classic Game Theory Problem
Game Theory · Classic ProblemsThe Prisoner's DilemmaWhy two perfectly rational individuals can end up worse off by acting in their own self-interest — the most famous problem in all of game theory.Imagine you and a friend are arrested for a crime. The police separate you and offer each of you the same deal: betray your partner and go free while they serve 10 years — or stay silent. If both stay...
What is Variance in Statistics? Formula, Examples and Interpretation
Statistics · Descriptive StatisticsWhat is Variance?The average squared deviation from the mean — why it matters, how to calculate it, and how it relates to standard deviation and risk.Two investment portfolios both return an average of 8% per year. But Portfolio A returns between 6% and 10% year after year, while Portfolio B swings between −20% and +36%. The mean is the same — but the risk is...
The Phillips Curve: Inflation, Unemployment, and the Expectations Trap
The Phillips curve showed a simple inflation-unemployment trade-off — until the 1970s destroyed it. A beginner-friendly guide to the original curve, expectations, the NAIRU, stagflation, and the post-COVID inflation debate. With worked calculations and exam-style practice questions.
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