Updated A.Y. 2017-2018

Outline (Provisional)

Information Economics. Implementation. Auctions. Adverse Selection. Moral Hazard. Modern Theory of Monopoly. Price Discrimination. Empirical Model of Demand. Firm Conduct. Merger Analysis. Patent and Technology Diffusion.

Exam and grading

The exam for the whole course (GAMES, INFORMATION AND CONTRACT THEORY AND INDUSTRIAL ORGANISATION AND COMPETITION POLICY) consists in three tests: a written exam on Game Theory, an oral presentation on Industrial Organisation, and a take-home exercise on Social Capital. You will have a mark for each test.

The final mark is given by: 0.4*(mark of written exam) + 0.3*(oral presentation) + 0.3*(take-home exercise).

To be passed, the final mark must be no lower than 18. Moreover, the mark of the written exam and one of the other tests (either the oral presentation or the take-home exercise) must be no lower that 18, and the mark of the remaining test (either the oral presentation or the take-home exam) must be no lower that 15. You will be admitted to the oral presentation only if you pass the written exam.

All the tests must be passed within one exam session, otherwise all the tests will be re-taken within one session.

During the course, a pre-exam will be also available. The pre-exam is a written exam on Game Theory. If you pass the pre-exam (mark no lower than 18), you are exempted from the written exam and you are directly admitted to the oral presentation. However, even if you pass the pre-exam you can decide to take the written exam, but in this case the mark of the pre-exam will expire.

Main reference

Tirole, J. (198). The Theory of Industrial Organisation. MIT University Press.

Readings discussed in class

Akerlof, G. (1970). The market for "lemons": Quality uncertainty and the market mechanism. The Quarterly Journal of Economics, 84(3), 488-500.
Myerson, R.B. and M. Satterthwaite (1983), Efficient mechanisms for bilateral trading, Journal of Economic Theory, 28, 265-281.

Further readings

Gibbard, A. (1973), Manipulation of voting schemes: A general result, Econometrica, 41, 587-601.
Satterthwaite, M. (1975), Strategy-proofness and Arrow’s conditions: Existence and correspondence theorems for voting procedures and social welfare functions, Journal of Economic Theory, 10, 187-217.

Diary of lectures

Lecture 1. Arrow-Debreu economics. Pareto efficiency. Competitive equilibrium. Welfare theorems.

Lecture 2. Asymmetric information and markets failures. The lemons problem (Akerlof, 1970).

Lecture 3. Mechanism implementation. Incentive compatibility. Revelation principle.

Lecture 4. Implementation in dominant strategies. Direct mechanism and dictatorial rule (Gibbard, 1973; Satterthwaite, 1975). Bayesian implementation. A seller interacting with buyer(s) (Myerson and Satterthwaite, 1983)