Volume 2 Issue 2

One of the applications of the prospect theory is the behavioral phenomenon of the negative elasticity of the individual labor supply. This paper argues that the negative elasticity of labor supply can be understood better with the help of the interpretation of the Slutsky equation with regard to the common consumption-leisure choice. The interpretation of the Slutsky equation corresponds to the empirical evidence that leisure is a net complement for an important part of consumption.

A hypothesis of uncertain future was created and first applied in the field of utility and prospect theories. An extension of application of the hypothesis to the field of forecasting is considered in the article. The concept of inevitability of unforeseen events is a part of the hypothesis of uncertain future, namely of its first consequence. Partially unforeseen events and their role in forecasting are analyzed. Possible applications of the hypothesis in the field of forecasting are considered. Generally, preliminary preparations of forecast corrections are shown to be able, under specified conditions, to quicken the revisions of forecasts after partially unforeseen events have occurred. Particularly, correcting formulae for forecasts are proposed, including additive-multiplicative formulae. The hypothesis of uncertain future, its consequences and their possible applications are briefly reviewed.

Presently, we cannot find the scientific analysis that clearly explains the deepest roots of global economical and moral crisis. Because of that many famous politicians, economists, sociologists denote the understanding of current situation as the most valuable attainment. Under traditional influence of the doctrine of spontaneous harmony of egoistic individual behavior many economists believe that competition and private property rights through the markets' price mechanism leads in the long run to the Pareto efficiency equilibrium. At the same time the social and economic reality categorically asks to ascertain the market failure and to revision the classical statements of microeconomics. The perfect competition market has lost its attributes due to dialectics of interactions of agents. The investigation of the interactions strategies of the individuals are based on the game theory, what also helps to understand the role of asymmetric information as a specific market failure factor. In the present paper the Martin Shubik classical surviving game is analyzed and some statements of Herbert Gintis concerning this game are critically appraised. The solution of Martin Shubik game in the original geometrical form is offered. The problem of Martin Shubik “does the fittest necessary survive?” is transformed according the case of asymmetric information in problem “does the pretender survive?”, for which the answer “if the agent is not the weakest, but he pretends to be the weakest, than this agent survives with high probability” is offered. The results of the present paper appear to be innovative, not discussed in literature available to the author of the present paper.

After re-gaining its independence on 18 October 1991, the Republic of Azerbaijan started the transformation to the market-based economy and the integration into the world economy. The country s oil and natural gas reserves have been considered the main source for financing a range of government programs for reforms. On the one hand, these reserves had to be used effectively; on the other hand, there was a huge demand for foreign investment for extraction. To this end, Azerbaijan has signed Contract of the Century in 1994. Although Azerbaijan has wide oil and natural gas reserves, it has faced a number of difficulties in its transition path. This study analyzes these problems and reforms for solving them. One of the types of the problems related to the economic structure of the former Soviet Union: disruption of the economic ties between the republics resulted in a decline of production, high levels of unemployment and prices and consequently led to an economic recession in all of the republics. Another set of problems related to the lack of sufficient institutional bases to transform to the market economy. Moreover, internal conflicts between the political parties and groups for having authority as well as political chaos in the republic can be considered other serious problems during the transition period. Furthermore, Karabakh war and occupation of 20 percent of the Azerbaijani territory by the Armenian military forces had made the situation extremely complicated. Despite all of these extremes, Azerbaijan transformed to the market-based economy decidedly and even became one of the fast growing countries of the world. Even in 2013, with the GDP growth rate of 5.6 percent, Azerbaijan was a leader among growing economies. In parallel with this significant economic development, there is still a need for some socio-economic and institutional reforms in order to get a well-functioning market-based economy in Azerbaijan.