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MICROECONOMICS 2

Syllabus

EN IT

Learning Objectives

LEARNING OUTCOMES: Introduction to strategic reasoning.

KNOWLEDGE AND UNDERSTANDING: Make students familiar with strategic reasoning when modeling social interactions.

APPLYING KNOWLEDGE AND UNDERSTANDING: Make students able to stress the strategic aspects of monopolistic and oligopolistic contexts in the presence of asymmetric information.

MAKING JUDGEMENTS: Make students aware of the common logic underlying different approaches to social interactions.

COMMUNICATION SKILLS: Make students able to formalize their intuitions and to communicate them to non-specialists.

LEARNING SKILLS: Improve the students’ problem-solving skills.


Prerequisites

Basic knowledge of neoclassical consumer theory, production theory under certainty and uncertainty. Notions of convexity of sets and of functions.

Program

Static games of complete information: main solution concepts. Existence theorem for a Nash equilibrium. Applications: models of imperfect competition. (9 lecture hours)

Dynamic games of complete information. Representation through extensive form and backward induction. Subgame perfection. Introduction to repeated games. Applications: bargaining models, repeated oligopoly. (9 lecture hours)

Games of incomplete information and Bayesian equilibria. Applications: first and second-price auctions, revenue equivalence. (9 lecture hours)

Dynamic games with incomplete information and perfect Bayesian equilibria. Applications: A model of screening in the labor market, reputational bargaining, political reputation and diplomatic brinkmanship. (9 lecture hours)

Books

R. Gibbons “A Primer in Game Theory”, 1992, Pearson Education Limited.

Mas Colell, A., Whinston M., and J Green “Microeconomic Theory” , 1995, Oxford University
Press.

M. J. Osborne "An Introduction to Game Theory", 2004, Oxford University Press.

Bibliography

R. Gibbons “A Primer in Game Theory”, 1992, Pearson Education Limited.

Mas Colell, A., Whinston M., and J Green “Microeconomic Theory” , 1995, Oxford University
Press.

M. J. Osborne "An Introduction to Game Theory", 2004, Oxford University Press.

Teaching methods

Frontal lectures and practices. Class discussions.

Exam Rules

The assessment method is entirely based on a written exam. The exam is composed of two or three exercises, possibly including theoretical questions. It requires students to be able to solve similar games to the ones covered in the module. The grade for the exam is expressed out of thirty points. Students can supplement a maximum of 15% of their exam score by solving weekly problem sets.

The grading is as follows:
Fail: major deficiencies and/or inaccuracies in knowledge and understanding of topics; limited ability to analyze, apply and synthesize.
o 18-20: Barely sufficient knowledge and understanding of topics with possible imperfections; basic understanding of models of competition with limited ability to solve applied problems.
o 21-23: Routine knowledge and understanding of topics; Correct analysis and synthesis skills with coherent logical argumentation and some ability to solve applied problems.
o 24-26: Fair knowledge and understanding of topics; Good analytical and synthesis skills with rigorously expressed arguments and good ability to make connections and apply the course material.
o 27-29: Comprehensive knowledge and understanding of topics; Remarkable skills of analysis, synthesis. Very good ability to independently make connections and apply learnt material.
o 30-30L: Excellent level of knowledge and understanding of topics. Remarkable analytical and synthesis skills and independent ability to apply and make connections within the course material. Arguments expressed in an original way.