In the context of Proposition 8.14, prove that the function \(\lambda \mapsto \gamma(\lambda)\) is strictly increasing and admits the representations given in (8.34).

Data From Proposition 8.14

Transcribed Image Text:

Proposition 8.14 In the context of the model described above (see Grossman & Stiglitz [849]), the function y() is strictly increasing. For = 0 it is given by y(0)=eacry 1+n and, for >0, it admits the representation y(A) = eacry Var(dido = do) 1+m =eacri Var(dna (do, u)=n (do, u)) (8.34) V1+m+nm