Condition for Lender's Highest Income in the Two-Borrower Exclusion Model
In the one-lender, five-borrower model where two borrowers are excluded, a key assumption is that the lender remains the highest earner. This condition holds if the lender's income, derived from the three active borrowers (3s), is greater than or equal to the income of any single active borrower (1-s). This relationship is expressed by the inequality $3s \geq 1-ss \geq 1/4$. Therefore, the analysis of this exclusion scenario is valid only when the lender's share is at least one-quarter.
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Introduction to Microeconomics Course
CORE Econ
Ch.9 Lenders and borrowers and differences in wealth - The Economy 2.0 Microeconomics @ CORE Econ
The Economy 2.0 Microeconomics @ CORE Econ
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Condition for Lender's Highest Income in the Two-Borrower Exclusion Model
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