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[harrison_kreps]: Fix axis #645

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merged 1 commit into from
Oct 15, 2025
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[harrison_kreps]: Fix axis #645

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8 changes: 4 additions & 4 deletions lectures/harrison_kreps.md
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Original file line number Diff line number Diff line change
Expand Up @@ -414,15 +414,15 @@ def price_optimistic_beliefs(transitions, dividend_payoff, β=.75,
p_old = p_new
p_new = β * np.max([q @ p_old
+ q @ dividend_payoff for q in transitions],
1)
axis=0)

# If we succeed in converging, break out of for loop
if np.max(np.sqrt((p_new - p_old)**2)) < tol:
break

ptwiddle = β * np.min([q @ p_old
+ q @ dividend_payoff for q in transitions],
1)
axis=0)

phat_a = np.array([p_new[0], ptwiddle[1]])
phat_b = np.array([ptwiddle[0], p_new[1]])
Expand Down Expand Up @@ -482,7 +482,7 @@ def price_pessimistic_beliefs(transitions, dividend_payoff, β=.75,
p_old = p_new
p_new = β * np.min([q @ p_old
+ q @ dividend_payoff for q in transitions],
1)
axis=0)

# If we succeed in converging, break out of for loop
if np.max(np.sqrt((p_new - p_old)**2)) < tol:
Expand Down Expand Up @@ -614,4 +614,4 @@ with **permanently optimistic** investors - this is due to the marginal investor
```{solution-end}
```

[^f1]: By assuming that both types of agents always have "deep enough pockets" to purchase all of the asset, the model takes wealth dynamics off the table. The Harrison-Kreps model generates high trading volume when the state changes either from 0 to 1 or from 1 to 0.
[^f1]: By assuming that both types of agents always have "deep enough pockets" to purchase all of the asset, the model takes wealth dynamics off the table. The Harrison-Kreps model generates high trading volume when the state changes either from 0 to 1 or from 1 to 0.
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