ECON 713: Microeconomic Analysis II
Professor: James Bono
Class Location: Ward 301
Class Meeting Time: W 8:10-10:40
Term: Spring 2008
Website: Please See Blackboard Site
Office Location: Roper 215
Office Hours: W 5-8pm and by appointment (tentative)
Email: bono@american.edu
Office Phone: (202) 885-2718
Required Text: Microeconomic Theory, Mas-Colell, Whinston and Green,
Oxford University Press, 1995. ISBN 0-19-510268-1.
Suggested Reference Text: A Course in Game Theory, Osborne and Rubinstein, MIT Press, 1994.
Grading Criteria:
• Problems (assigned weekly, 9 total) 1% each
• Midterm 1 (Feb. 11) 30%
• Midterm 2 (Mar. 25) 30%
• Final (May 6) 31%
Overview and Objectives: The primary purpose of this course is to familiarize PhD students with the standard theory used by academic economists.
The secondary purpose of this course is to help PhD students develop theoretical models for future dissertation research.
Email: Class updates will be sent to the course mailing list, so students are
required to check the email address that is registered with my.american.edu.
Problems: After each lecture that is not followed by an exam, I will assign
several problems. You are encouraged to work in groups. However, if you
1
do, each person must submit his or her own problem and write the names of
those you worked with on your paper.
Problems are due at the beginning of the class after they were assigned.
No late problems will be accepted. At the end of the course, I will duplicate
your highest score to replace your lowest.
Exams: No make-up exams will be given. In the case of a well-documented
family or medical emergency, the student will scale the other exam grades
proportionately.
Cheating and Plagiarism: Written work that you hand in is assumed to
be original unless your source material is documented appropriately. Using
the ideas or words of another person, even a peer, or a web site, as if it
were your own, is plagiarism. Cheating and plagiarism are serious academic
offenses. Students should read the Academic Integrity Code section of the
Student Handbook.
Tentative Outline
1. Game Theory
(a) Simultaneous Move Games - Week 1
i. Definition
ii. Nash Equilibrium
A. Dominance
B. Rationalizability
C. Best Responses
iii. Mixed Strategy NE
A. Existence Theorem
B. Properties
(b) Dynamic Games with Complete Information - Week 2
i.
ii.
iii.
iv.
Bargaining Games
Subgame Perfect NE
Backward Induction
Strategic Form Representation
2
(c) Repeated Games & Static Games of Incomplete Information Week 3
i. Repeated Games
ii. Bayesian Games
(d) Dynamic Games of Incomplete Information & Mechanism Design
- Week 4
i. Perfect Bayesian Equilibrium
ii. Mechanism Design
A. Implementation
B. Revelation Principle
C. Auctions
D. Principal-Agent Model
(e) Behavioral Game Theory - Weeks 6 & 7
i. Level-K thinking
ii. Fairness Equilibrium
iii. Quantal Response Equilibrium
(f) Evolutionary Game Theory - Week 8
i.
ii.
iii.
iv.
Replicator Dynamic
Monomorphic Steady States
Polymorphic Steady States
Learning
(g) Coalitional Game Theory - Week 9
i.
ii.
iii.
iv.
v.
vi.
Core
Kernel
Bargaining Set
Nucleolus
Value
Nash Bargaining
2. Social Choice Theory - Week 11
(a) Condorcet
(b) Arrows Theorem
3
(c) Sen’s Theorem
(d) Geometry of Voting
3. General Equilibrium - Week 12
(a) Existence
(b) Edgeworth Box
4. Risk and Uncertainty (Finance) - Weeks 13 & 14?
(a) Arbitrage
(b) Portfolio Choice
(c) Black Scholes
(d) Mandelbrot
4