Advanced Microeconomics II (2009)
Last updated: April 9 Course number: ECO601E
Instructor: Yosuke Yasuda (yyasuda@grips.ac.jp)
Time/Room: Thursday 3rd and 4th (13:20‐16:20) / Room 5D Office hours: By appointment
Course web: http://sites.google.com/site/yosukeyasuda/Home/teaching/micro09_2
1. Course Description
This is an advanced course in microeconomics, succeeding to Advanced Microeconomics I (ECO601E) in which we study individual economic decisions and their aggregate consequences under ideal situations. In this course, we extend our previous analyses to incorporate imperfectly competitive market structures, dynamic market competitions, and incomplete information. To this end, we study game theory, a collection of mathematical tools for analyzing strategically interdependent situations. Most of the topics covered in this course parallels to those of Game Theory (ECO290E), but are explained in much more rigorous way.
2. Course Outline
1. Static games and Nash equilibrium: [G] Ch.1.1 2. Why and how is NE reached? : [NS] Ch.8 3. Static oligopoly models: [G] Ch.1.2; [NS] Ch.15 4. Mixed strategies and existence theorem: [G] Ch.1.3 5. Dynamic Games and SPNE: [G] Ch.2.1., 2.2.A, 2.4 6. Commitment: [G] Ch.2.1.B; [NS] Ch.15
7. Repeated games: [G] Ch.2.3; [NS] Ch.15
8. Static games with incomplete information: [G] Ch.3.1, 3.3 9. Trades under incomplete information: [G] Ch.3.2.B, 3.2.C 10. Dynamic games with incomplete information: [G] Ch.4.1 11. Signaling and cheap talk: [G] Ch.4.2, 4.3.A; [NS] Ch.8 12. Principal‐agent model 1: Screening: [NS] Ch.18 13. Principal‐agent model 2: Moral hazard: [NS] Ch.18 14. Bargaining: [G] Ch.2.1.D
15. Final exam: in class; 120 minutes
3. Grading
Course grade will be determined by combining grades on problem sets (30%) and a final exam (70%). Each problem set will be distributed in class and will be due a week
later. Because solutions are published, late problem sets cannot be accepted. You are encouraged to form study group, but must write up solutions independently.
4. Textbooks
There are two main textbooks for this course:
[G] Robert Gibbons, Game Theory for Applied Economics, 1992
[NS] Walter Nicholson and Christopher Snyder, Microeconomic Theory: basic principles and extensions, 10th edition 2007
The following is an introductory microeconomics textbook whose second part contains a lot of intuitive discussion on the topics of our course.
David Kreps, Microeconomics for Managers, 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
If you need comprehensive books on contract theory (Lecture 11‐13), then the followings are recommended:
Jean‐Jacques Laffont and David Martimort, The Theory of Incentives: The Principal‐Agent Model, 2002
Bernard Salanie, The Economics of Contracts: A Primer, 2nd edition, 2005
