Economics 701: Advanced microeconomic theory, spring 2011


Instructor: Jeremy A. Sandford

Office hour: W 1-2pm 335L B&E, or by appointment
Lecture: 2:00-3:15 TH, BE 214

Midterm date: Friday, March 4, 1-4pm
Final date: Friday, May 6, 8am-10am

Required text: Mas-Colell, Whinston, and Green, Microeconomic Theory, Oxford University Press

syllabus

Homework 1, answers
Homework 2, answers
Homework 3, answers
Homework 4, answers
Homework 5, answers
Homework 6, answers
Homework 7, answers


Schedule


Thursday, January 13: deficiencies of GE, normal form games, randomized strategies
readings: Mas-Colell, chapter 7
Gale, D. (2000), Strategic Foundations of General Equilibrium, chapter 1

Tuesday, January 18: expected utility, extensive form games
readings: Mas-Colell, chapter 6B
Mas-Colell, chapter 7
Handout on expected utility
handout on extensive form game notation

Thursday, January 20: solution concepts for normal form games: dominance, iterated strict dominance, rationalizability
reading: Mas-Colell, chapter 8
handout on dominant/dominated strategies

Tuesday, January 25: solution concepts for normal form games: Nash equilibrium
reading: Mas-Colell, chapter 8

Thursday, January 27: Interpretations of Nash equilibrium, credibility of commitments in extensive form games, refinements of Nash equilibrium for extensive form games
reading: Mas-Colell, chapter 9
handout on subgame perfect equilibrium

Tuesday, February 1: subgame perfect equilibria, perfect Bayesian equilibria
Handout on perfect Bayesian equilibrium
reading: Mas-Colell, chapter 9

Thursday, February 3: sequential equilibrium
reading: Mas-Colell, chapter 9

Tuesday, February 8: extensive form perfection, calculating sequential equilibria
reading: Mas-Colell, chapter 9
Example problem about bargaining

Thursday, February 10: Asymmetric information, signaling games
reading: Cho, I. and D. Kreps, 1987, "Signaling games and stable equilibria," QJE, 52 pp. 179-222
Handout on signaling games
Mas-Colell, chapter 8.E, 9.D

Tuesday, February 15: Equilibrium domination and the intuitive criterion in signaling games, examples
reading: Cho, I. and D. Kreps, 1987, "Signaling games and stable equilibria," QJE, 52 pp. 179-222
Handout on the intuitive criterion

Thursday, February 17: minmax theorem, zero sum games

Tuesday, February 22: repeated games
reading: Mas-Colell, chapter 12, appendix A (nb. as Mas-Colell has comparatively paltry material on repeated games, it may be helpful to consult other game theory books for this portion of the course, such as books by Gibbons, Myerson, Fudenberg and Tirole, Osborne, or Osborne and Rubinstein)
handout on repeated games notation

Thursday, February 24: repeated games

Tuesday, March 1: oligopoly models: the basic Cournot model
reading: Mas-Colell, chapter 12

Thursday, March 3: oligopoly models: Cournot, collusion in the Cournot model
reading: Mas-Colell, chapter 12

Friday, March 4: Midterm exam, answers (answers updated on 3/6 with a minor change to 2b)

Tuesday, March 8: No class

Thursday, March 10: No class

Friday, March 11, 9:30am: oligopoly models: Stackelberg
reading: Mas-Colell, chapter 12

Tuesday, March 15: No class

Thursday, March 17: No class

Tuesday, March 22: No class

Thursday, March 24: oligopoly models: Bertrand, capacity constaints, strategic precommitments, entry
reading: Mas-Colell, chapter 12

Tuesday, March 29: Adverse selection
reading: Mas-Colell, chapter 13
Akerlof, G. 1970, "The Market for Lemons", QJE, 84, pp. 488-500

Thursday, March 31: Adverse selection in a labor market setting
reading: Mas-Colell, chapter 13

Tuesday, April 5: Education as a labor market signal
reading: Mas-Colell, chapter 13
Spence, M. 1973, "Job market signaling", QJE, 87, pp. 355-374

Thursday, April 7: Spence model ctd, screening
reading: Mas-Colell, chapter 13

Tuesday, April 12: Statistical discrimination and pervasive discrimination
reading: Coate, S. and G. Loury (1993), "Will affirmative-action policies eliminate negative stereotypes?" AER, 83, pp. 1220-1240

Thursday, April 14: Coate and Loury equilibria, numerical example
reading: Coate, S. and G. Loury (1993), "Will affirmative-action policies eliminate negative stereotypes?" AER, 83, pp. 1220-1240

Tuesday, April 19: Affirmative action in Coate and Loury
reading: Coate, S. and G. Loury (1993), "Will affirmative-action policies eliminate negative stereotypes?" AER, 83, pp. 1220-1240

Thursday, April 21: Principal agent models: observable effort and unobservable effort with risk neutral agents
reading: Mas-Colell, chapter 14.B

Tuesday, April 26: Principal agent models: unobservable effort
reading: Mas-Colell, chapter 14.B

Thursday, April 28: principal-agent models: examples
reading: Mas-Colell, chapter 14

Friday, May 6: Final exam, answers