Last up-dated: July 20, 2012
Office Hours:
Instructor, Yosuke YASUDA: Mondays 10:00-12:00 or by appointment (Room C911)
TA: Ryoko SUSUKIDA: TBA (TBA)
1. Important Announcement
The last problem set (PS6) was just uploaded, which is due on July 30 (Mon) The weight is 50% larger than the usual problem set, i.e., 15 points. July 15
There will be a final exam on July 20 (Mon) from 9am. The exam does not cover the materials from the last two lectures (on July 18 and 19). June 28
This web page is under construction. April 3
2. Course Description
This is an advanced course in microeconomics, succeeding to Advanced Microeconomics I (ECO600E) in which we study individual economic decisions and their aggregate consequences under ideal situations. In this course, we extend our previous analyses to incorporate externalities, imperfectly competitive market structures, dynamic market competitions, incomplete information, and indivisible goods. To this end, we study game theory, a collection of mathematical tools for analyzing strategically interdependent situations, and economics of information. Many of the topics covered in this course are parallels to those of Game Theory (ECO290E), but are explained in much more rigorous way. Course grade will be determined by homework assignments (50%) and a final exam (50%).
3. Course Outline
Monopoly May 31
Externalities June 7
Assignment: PQ5
Reading: Varian, Chapter24
Public Goods June 13
Reading: Varian, Chapter23
Static Games June 14
Assignment: PS4
Oligopoly June 20
Reading: Cabral, Chapter7
Reading: Bagwell and Wolinsky (2002)
Dynamic Games June 21
Assignment: PQ6
Supplementary note
Reading: Fudenberg and Tirole (1984)
Repeated Games June 27
Reading: Kandori (2008)
Incomplete Information Games June 28
Assignment: PS5
Reading: Gibbons, Chapter3.2.C
Auction Theory July 4
Reading: McAfee and McMillan (1987)
Reading: Klemperer (2003)
Dynamic Games with Incomplete Information July 5
Assignment: PQ7
Reading: Gibbons (1997)
Reading*: Kohlberg and Mertens (1986)
Adverse Selection July 11
Reading: Salanie, Chapter 2.2
Moral Hazard July 12
Assignment: PS6
Reading: Salanie, Chapter 7
Social Choice July 18
Reading: Geanakoplos (2005)
Reading: Reny (2001)
Bargaining and Cooperative Game July 19
Reading: Nash (1950)
Reading: Osborne and Rubinstein (1990), Chapter 2
Final Exam July 20
4. Assignments
Inside ( ) shows the due day for each assignment.
Practice Quiz
PQ5 (June 14): file
PQ6 (June 28): file
PQ7 (July 12): file
Problem Sets
PS4 (June 21): file
PS5 (July 5): file
PS6 (July 30): file
5. Textbooks
Advanced Microeconomics (I and II) does not use specific textbooks. Instead, I provide my own lecture slides, which are downloaded from above course outline. There are three textbooks which you may find useful to complement my lecture notes. You are encouraged to purchase the second ([NS]), since it will serve as the main textbook for Advanced Microeconomics III and IV. For the first one ([JR]), the copies of related chapters will be distributed in class.
[JR] Geoffrey Jehle and Philip Reny, Advanced Microeconomic Theory, 3rd edition, 2011.
[NS] Walter Nicholson and Christopher Snyder, Microeconomic Theory: Basic Principles and Extensions, 10th edition, 2007
[G] Robert Gibbons, Game Theory for Applied Economists, 1992
A useful text at roughly the same level as Gibbons, but contains variety of example is:
Martin Osborne, An Introduction to Game Theory, 2004
A useful textbook for game theoretical analyses on oligopoly markets is:
Luis Cabral, Introduction to Industrial Organization, 2000
Those who look for more lucid treatment than the above textbooks may consult with the following authoritative sources. The former incorporates game theoretical perspectives into microeconomics in depth, and the latter is as standard textbook most widely used in Economics Ph.D. microeconomics courses.
David Kreps, A Course in Microeconomic Theory, 1990
Andreu Mas-Colell, Michael Whinston and Jerry Green, Microeconomic Theory, 1995
On contract theory, the following concise textbook is helpful:
Bernard Salanie, The Economics of Contracts, 2nd ed. 2005
6. Related Materials
Bagwell, Kyle and Asher Wolinsky (2002), "Game Theory and Industrial Organization," A chapter in Handbook of Game Theory with Economic Applications. SSRN
Bolton, Patrick and Mathias Dewatripont (2004), Contract Theory, MIT Press.
Farrell, Joseph and Matthew Rabin (1996), "Cheap Talk," Journal of Economic Perspectives, 6: 83-101. JSTOR
Fudenberg, Drew and Jean Tirole (1984), "The Fat-Cat Effect, the Puppy-Dog Ploy, and the Lean and Hungry Look," American Economic Review (Papers and Proceedings), 74: 361-366. JSTOR
Geanakoplos, John (2005), "Three brief proofs of Arrow’s Impossibility Theorem.," Economic Theory, 26: 211–215.
Gibbons, Robert (1997), "An Introduction to Applicable Game Theory," Journal of Economic Perspectives, 11: 127-149. JSTOR
Kandori, Michihiro "Repeated Game" in The New Palgrave Dictionary of Economics, 2nd edition, 2008.
Klemperer, Paul (2003), "Why Every Economist Should Learn Some Auction Theory," Chapter 2 in Advances in Economics and Econometrics, Volume 1, edited by Dewatripont, Hansen, and Turnovsky. Link to the final draft
Kohlberg, Elon and Jean-Francois Mertens (1986), "On the Strategic Stability of Equilibria," Econometrica, 54: 1003-1037. JSTOR
McAfee, Preston and John McMillan (1987), "Auctions and Bidding," Journal of Economic Literature, 25: 699-738. JSTOR
Nash, John (1950), "The Bargaining Problem," Econometrica, 18: 155-162. JSTOR
Osborne, Martin and Ariel Rubinstein (1990), Bargaining and Markets, Academic Press.
Reny, Philip (2001), "Arrow’s Theorem and the Gibbard-Satterthwaite Theorem: A Unified Approach," Economics Letters, 70: 99–105.
Watson, Joel (2008), Strategy: An Introduction to Game Theory, W. W. Norton.
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