The aim of the course is to develop the basic tools for analyzing problems of resource allocation used by economists working in research, government and business. The course focuses primarily on price-taking behavior by economic agents (topics include the firm, the consumer, general equilibrium, uncertainty and risk, welfare economics), on strategic interaction and on market failures.
The study of strategic interaction begins with an introduction to game theory.
Special attention will then be devoted to: imperfect competition, adverse selection, signaling, moral hazard, externalities and public goods. The aim of the first part of the course (3 ECTS: MEPIN and MEP) is to treat modern developments in microeconomics without being overly mathematical, and to develop a capacity to apply economic concepts to real-world problems. The aim of the second part of the course (3 ECTS: MEP) is instead to deepen the understanding of the basic topics and to treat some more complex ones. Grades will be based on hand-in assignments (25%) and a final written exam (75%).
Part I (3 ECTS: MEPIN and MEP)
i. Price Taking Behavior: Firm and Consumer Theory, [C] 2, 3, 4, 5.
ii. Game Theory and Applications: Static Games [C] 10.2 and [O] 2.1, 2.6;
Dominance and Nash Equilibrium [C] 10.3.1-4 and [O] 2.8-9; Mixed Strategy Nash Equilibrium [C] 10.3.5 and [O] 4.1-4; Oligopoly [C] 10.4 and [O] 3.1-2.
iii. Market Failures: Introduction to the Economics of Information;
Externalities [C] 13.4 and [O] 2.8.4, 9.5; Public Goods [C] 13.6.1-4.
Part II (3 ECTS: MEP)
iv. General equilibrium, Welfare economics, Uncertainty and Risk, [C] 6, 7, 9 and [V] 11.
v. More advanced topics in the Economics of Information: Adverse Selection, Monopoly [LM] 2.1-10; Adverse Selection, Competition [C]
11.2 and [S] 3.2.1; Signaling [C] 11.3 and [S] 4 and [O] 10.5-6; Moral Hazard [C] 11.4 and [S] 5.1-3.2 and [LM] 4.1-5 5.1; Empirical issues in the Economics of Information.
- [C] F. A. Cowell, Microeconomics, Principles and Analysis, Oxford University Press, 2006.
- [V] H. R. Varian, Microeconomic Analysis, W. W. Norton & Company, 3rd edition, 1993.
- [O] M. J. Osborne, An Introduction to Game Theory, Oxford University Press, 2004.
- [S] B. Salaniè, The Economics of Contracts: A Primer, MIT Press, 2005.
- [LM] J. J. Laffont and D. Martimort, The Theory of Incentives, Princeton University Press, 2002.
Other useful references
- Mas-Colell, M. D. Whinston and J. R. Green, Microeconomic Theory, Oxford University Press, 1995.
- I. Macho-Stadler, and J. D. Pérez-Castrillo, An Introduction to the Economics of Information Incentives and Contracts, Oxford University Press, 2001.
- P. Bolton and M. Dewatripont, Contract Theory, MIT Press, 2005.
Master of Science in Economics in Economia e Politiche Internazionali, Core course, Fundamental knowledges, 1st year