Microeconomic Theory

Description

COURSE DESCRIPTION: The first part of the course aims at extending the economics toolbox from the earlier microeconomic courses (such as consumer theory and general equilibrium theory) to richer settings. The second part of the course deals with how people make decisions when one needs to worry about other people's goals and incentives. We will then apply game theoretic approach to non-perfectly competitive situations. COURSE SUBJECT AREAS: 1. Consumer Theory (6 lectures) 2. Decision Making under Uncertainty (3 lectures) 3. General Equilibrium (4 lectures) 4. Social choice (5 lectures) 5. Game Theory (5 lectures) • The first topic studied in the class is individual decision making. This is the building block of many economic models which are usually interactions of individual decision makers pursuing their private interests. We study both the preference-based and choice-based approaches in this part. Under the preference-based approach, the decision maker is assumed to have a preference relation over her set of possible choices that satisfies certain rationality assumptions. The choice-based approach, on the other hand, focuses on the decision maker’s observed choices. We will be able to discern the choices of the rational decision makers from those of irrational ones. We will also show when an individual’s preference relation can be represented by a utility function, which is usually taken for granted in all areas of economics. • We next introduce uncertainty into the theory.