Master
2018/2019
Microeconomics II (advanced level)
Type:
Compulsory course (Financial Economics)
Area of studies:
Economics
Delivered by:
International College of Economics and Finance
When:
1 year, 2 semester
Mode of studies:
offline
Master’s programme:
Financial Economics
Language:
English
ECTS credits:
5
Contact hours:
76
Course Syllabus
Abstract
This course consists of four parts: game theory, contract theory, mechanism design, and social choice theory. Game-theoretical part covers static and dynamic games, both of complete and incomplete information. All other parts use tools introduced here. Theory of contracts focuses on the principal-agent models with asymmetric information and unobservable actions. As examples of mechanism design problems, we cover auctions and two-sided matching. We end the course by social choice theory that studies preference aggregation rules and their normative appeal.
Learning Objectives
- teach to design mechanisms taking into account the asymmetry of information;
- enable students to apply game-theoretic concepts to carry out theoretical research
- identify and model real life situations where the studied concepts are applicable
- critically evaluate theoretical research in economics
Expected Learning Outcomes
- Outline the fundamental principles of strategic reasoning
- Predict the equilibrium outcomes among agents with strategic power
- Evaluate the impact of information asymmetries on strategic reasoning and equilibrium outcomes
- Explain the role of time and observation of the opponents' moves in dynamic strategic interaction
- Predict the long term outcomes of repeated strategic interaction
- Evaluate the role of communication in determining economic outcomes
- Outline the main tradeoffs in models with adverse selection and moral hazard
- Apply deferred acceptance algorithm to one-to-one matching problems
- Be able to discuss properties of different social choice functions
Course Contents
- Game theoryDominance and rationalizability Nash equilibrium Incomplete information games Dynamic games Repeated games Cheap-talk, signaling, persuasion games
- Contract Theorya. hidden information: screening b. hidden action: moral hazard
- Matching theorya. deferred acceptance algorithm b. lattice structure of stable matchings c. strategy-proofness: impossibility result
- Social choice theorya. Arrow impossibility theorem b. restricted domain: single-peaked preferences and median voter theorem
Interim Assessment
- Interim assessment (2 semester)0.5 * exam + 0.1 * homeworks + 0.2 * intermediate test 1 + 0.2 * intermediate test 2
Bibliography
Recommended Core Bibliography
- Contract theory, Bolton, P., 2005
- Martin J Osborne, & Ariel Rubinstein. (2009). A Course in Game Theory. Levine’s Bibliography. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.cla.levrem.814577000000000225
- Mas-Colell, A., Whinston, M. D., & Green, J. R. (1995). Microeconomic Theory. Oxford University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.oxp.obooks.9780195102680
- Roth, A. E., & Sotomayor, M. A. O. (1992). Two-Sided Matching. Cambridge University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.cup.cbooks.9780521437882
Recommended Additional Bibliography
- Mathematics for economists, Simon, C. P., 1994