Syllabus in English
Fall, 2nd semester / Thursdays 4th (15:00-16:30) and 5th (16:40-18:10) / Room xx
Office Hours: by appointment
E-mail: yosuke.yasuda <at> gmail.com
Website: https://sites.google.com/site/yosukeyasuda2/home/lectures/grips2025_advancedmicro2
Announcement | お知らせ
[2025, November 30] --- The website (this page) has just been created.
Last update: November 30, 2025
This is the second course in the sequence of advanced microeconomics, succeeding to Advanced Microeconomics I (ECO6000E).
In Advanced Microeconomics II, we study individual economic decisions and their interactions, such as oligopoly markets, bargaining, and contract/mechanism design.
This course offers lectures on microeconomics at the level of advanced master to doctoral program in public policy schools.
In modern economics, the analytical tools of microeconomics are used as a foundation for analyzing macroeconomics, finance, and public finance. Therefore, mastery of the material covered in this course will help students understand a wide range of fields of economic research.
Students will learn and apply mathematical frameworks of individual economic decisions and their interactions.
The topics covered include (a) choice under uncertainty, (b) market failure, (c) game theory, (d) incentive design.
The goal is to be able to model interactions of agents based on the above mathematical frameworks.
Basic knowledge of multi-variable calculus and probability is assumed to be the prerequisites of the course.
The final grade will be based on the two homeworks (40 points in total) and the final exam (60 points).
Problem Set 1
Problem Set 2
Anyone in GRIPS (including faculty members) can audit this course.
Required: I use the following book as main textbook for this course.
Jehle, G. and Reny, P. [JR], Advanced Microeconomic Theory, 3rd ed., 2010.
This is a great graduate-level textbook that offers an excellent balance of level, content, reliability of description, and quantity.
The copies of related chapters will be distributed in class (so you don’t need to purchase them).
Others: Supplementary textbooks are as follows. (The asterisk (*) indicates advanced material.)
Microeconomics
Varian [Va], Microeconomic Analysis, 3rd, 1992.
This is an advanced undergraduate to graduate-level text with a reputation for clarity. It offers an excellent description of market theory and market failures and is one of the best books for understanding intuition. The structure is unique because it begins with producer theory rather than consumer theory.
Kandori, M. [Ka], Mighty Microeconomics: A Guide to Thinking Like An Economist, 2023.
This extraordinary book provides a comprehensive overview of microeconomics up to the advanced undergraduate level. In particular, the author discusses the importance of market theory very clearly.
This is an English translation of the Japanese book: 『ミクロ経済学の力』
Osborne, M and Rubinstein, A., Models in Microeconomic Theory, 2nd ed., 2023.
You can download the book (pdf) for free here.
*Mas-Colell, Whinston and Green [MWG], Microeconomic Theory, 1995.
This has been a "bible" (essential textbook or standard reference) for economics Ph.D. students over the pas few decades.
*Kreps, D., Microeconomic Foundations II, 2023.
Game Theory
Gibbons, R. [Gi], Game Theory for Applied Economists, 1992.
Tadelis, S., Game Theory: An Introduction, 2013.
This is a detailed textbook at roughly the same level as Gibbons.
*Fudenberg, D. and Tirole, J., Game Theory, 1991.
This is the definitive, advanced resource for anyone looking to pursue game theory seriously.
To be written ...
Lec 1. Expected Uility Dec 4
Slide
Textbook
Ka --- Ch.1: Theory of Consumer Behavior
JR --- Ch.1: Consumer Theory
Va --- Ch.7: Utility Maximization
MWG --- Ch3. Classical Demand Theory
Lec 2. Risk Aversion Dec 4
Textbook
Ka --- App.A: Essential Mathematical Concepts: All You Need to Know to Read This Book, App.B: Constrained Maximization Problems and the Method of Lagrange Multipliers
JR --- Ch.A1: Sets and Mappings, Ch.A2: Calculus and Optimisation
Va --- Ch.26: Mathematics, Ch.27: Optimization
MWG ---M.J: Unconstrained Maximization, M.K: Constrained Maximization
Lec 3. Externalities Dec 11
Lec 4. Public Goods Dec 11
Textbook
Ka --- App.A: Essential Mathematical Concepts: All You Need to Know to Read This Book, App.B: Constrained Maximization Problems and the Method of Lagrange Multipliers
JR --- Ch.A1: Sets and Mappings, Ch.A2: Calculus and Optimisation
Va --- Ch.26: Mathematics, Ch.27: Optimization
MWG ---M.J: Unconstrained Maximization, M.K: Constrained Maximization
Lec 5. Monopoly Dec 18
Textbook
Ka --- Ch.1: Theory of Consumer Behavior
JR --- Ch.1: Consumer Theory
Va --- Ch.9: Demand
MWG --- Ch.1: Preference and Choice, Ch.2: Consumer Choice
Lec 6. Static Games Dec 18
Textbook
Ka --- App.A: Essential Mathematical Concepts: All You Need to Know to Read This Book, App.B: Constrained Maximization Problems and the Method of Lagrange Multipliers
JR --- Ch.A1: Sets and Mappings, Ch.A2: Calculus and Optimisation
Va --- Ch.26: Mathematics, Ch.27: Optimization
MWG ---M.J: Unconstrained Maximization, M.K: Constrained Maximization
Lec 7. Olibopoly (1): Quantity Competition Dec 25
Textbook
Ka --- Ch.2: Theory of Firm Behavior
JR --- Ch.3: Theory of the Firm
Va --- Ch.1: Technology, Ch.2: Profit Maximization, Ch.3: Profit Function, Ch.4: Cost Minimization, Ch.5: Cost Function
MWG --- Ch.5: Production
Lec 8. Olibopoly (2): Price Competition Dec 25
Lec 9. Dynamic Games Jan 8
Textbook
Ka --- Ch.3: Market Equilibrium
Ka --- App.C: Compensating Variation and Equivalent Variation
JR --- Ch.4: Partial Equilibrium
Va --- Ch.13: Competitive Markets
MWG --- Ch.10: Competitive Markets, Ch.15: General Equilibrium Theory: Some Examples
Lec 10. Incomplete Information Games Jan 8
Textbook
Ka --- Ch.3: Market Equilibrium
Ka --- App.D: A Step-by-step Guide to Proving the Second Welfare Theorem
JR --- Ch.5: General Equilibrium
Va --- Ch.17: Exchange, Ch.22: Welfare
MWG --- Ch.16: Equilibrium and Its Gasic Welfare Properties
Lec 11. Moral Hazard Jan 15
Textbook
Ka --- Ch.8: Insurance and Moral Hazard
Va --- Ch.25: Information
MWG --- Ch.14: Principal-Agent Problem
Lec 12. Social Choice Jan 15
Textbook
Ka --- Ch.6: Simultaneous-Move Games and Nash Equilibrium
JR --- Ch.7: Game Theory
Va --- Ch.15: Game Theory
MWG --- Ch.7: Basic Elements of Noncooperative Games, MWG --- Ch.8: Simultaneous-Move Games
Lec 13. Mechanism Design and Auctions Jan 22
Textbook
JR --- Ch.9: Auctions and Mechanism Design
MWG --- Ch.23: Incentives and Mechanism Design
Lec 14. Two-Sided Matching Jan 22
Final exam (90 minutes) January xx
Screening
Jungle Economy
Assignment Problems
The Market for "Lemons"
Textbook
Ka --- Ch.9: Adverse Selection and Signaling
Va --- Ch.25: Information
MWG --- Ch.13: Adverse Selection, Signaling, and Screening
Syllabus
Last Update: November 30, 2025
1. Important Announcement
There will be a final exam on Feb 3 (Tue), 13:00-16:00 at 5H.
There will be a midterm exam on Dec 22 (Mon), 10:00-11:30 at 5J.
2. Lecture Hours:
Instructor, Yosuke YASUDA (yosuke.yasuda<at>gmail.com)
Tuesdays 10:40-12:10; 13:20-14:50 Room 5J
3. Office Hours:
Tuesdays 15:00-16:00 or by appointment (Room C911)
4. 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 a midterm exam (33%) and a final exam (67%). Problem sets will be distributed, but not be graded.
5. Course Outline
Expected Utility Nov 25
Reading: Ken Binmore, Rational Decision, 2009. Chapter3
Reference: Laffont Chapter1
Risk Aversion Nov 25
Reading: Laffont Chapter2
Monopoly Dec 2
Static Games Dec 2
Exercise 1
Supplementary note: slide 1
Mixed Strategies Dec 9
Supplementary note: slide 2
Review of Final Exam (for Ad. Micro 1) Dec 9
Oligopoly Dec 16
Problem Set 1
Reading: Cabral, Chapter7
Reference: Bagwell and Wolinsky (2002)
Dynamic Games Dec 16
Exercise 2
Supplementary note: slide 3
Reading: Watson, Chapter15
Reference: Tadelis, Chapter8
Problem Set 1: Solution
Midterm Exam (90 minutes) Dec 22
It covers Lectures 1-6. (Lecture 7 is NOT covered.)
Repeated Games Jan 6
Supplementary note: slide 4
Reading: Kandori (2008)
Incomplete Information Games Jan 6
Reading: Gibbons, Chapter3.2.C
Exercise 3
Auction Theory Jan 13
Reading: Klemperer (2003)
Reference: Krishna, Auction Theory (2nd ed.), 2009
Dynamic Games with Incomplete Information Jan 13
Problem Sets 2+3
Reference: Gibbons (1997)
Social Choice Jan 20
Reading: Geanakoplos (2005)
Mechanism Design Jan 20
Problem Sets 2+3: Solution
Reading: Tadelis, Chapter14
Final Exam (180 minutes) Feb 3
6. Assignments
Exercise and Problem Sets (uploaded day)
Exercise 1 : Q
Problem Set 1 : Q
Exercise 2 : Q
Problem Set 2+3: Q
Exercise 3 : Q
7. Past Exams
You can download the past exams below.
2013-14: Midterm; Final
2013: Final
2012: Final
2011: Final
2010: Midterm; Final
2009: Final
2008: Final
8. 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
Those of you look for more lucid treatment than the above textbooks may consult with the following authoritative sources. The former is most widely used for microeconomics courses for economics Ph.D. students. The latter is more accessible and contains recently developed topics.
Andreu Mas-Colell, Michael Whinston and Jerry Green, Microeconomic Theory, 1995
John Riley, Essential Microeconomics, 2012
A classic and rigorous textbook for information economics is:
Jean-Jacques Laffont, The Economics of Uncertainty and Information, 1991
For introduction to game theory, the following books are recommended:
Avinash Dixit, Susan Skeath, and David Reiley, Games and Strategies, 3rd, 2009
Joel Watson, Strategy, 3rd, 2013
Detailed textbooks at roughly the same level as Gibbons are:
Martin Osborne, An Introduction to Game Theory, 2004
Steven Tadelis, Game Theory: An Introduction, 2012
Those of you interested in pursuing game theory further may consult the advanced and authoritative sources such as:
Drew Fudenberg and Jean Tirole, Game Theory, 1991
Roger Myerson, Game Theory, 1991
Martin Osborne and Ariel Rubinstein, A Course in Game Theory, 1994
(You can download it for free from this website)
A useful textbook for game theoretical analyses on oligopoly markets is:
Luis Cabral, Introduction to Industrial Organization, 2000
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
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.
Go back to Top Page.