Master 2019/2020

Microeconomics II

Type: Compulsory course (Applied Economics and Mathematical Methods)

Area of studies: Economics

Delivered by: Department of Economics

Where: St.Petersburg School of Economics and Management

When: 1 year, 3, 4 module

Mode of studies: offline

Instructors: Igor Sloev, Кипяткова Вера Анатольевна

Master’s programme: Applied Economics and Mathematical Methods

Language: English

ECTS credits: 6

Contact hours: 52

Course Syllabus

Abstract

The main question of the course is how to aggregate individual interests into the unique social or group one. To answer on this question different concepts of fairness are applied and characterized. The course begins with the simplest game-theoretic models with two participants and then develops to more complicated n-person, dynamic and cooperative games. Another part of the course is devoted to social choice theory mainly to voting problems. The problems of existence optimal solutions and their finding are studied with the help of the modern mathematical methods.

Learning Objectives

• The main purpose of the course “Microeconomics 2” is to develop the competence of students in Microeconomics, with an especial attention to decision-making models including game theory and social choice theory.

Expected Learning Outcomes

• The student should know based competitive economics models.
• The student should know optimality concepts on conflict situations and their characterizations.
• The student should know methods of finding optimal behavior in some classes of strategic games.
• The student should know cost/profit sharing methods.
• The student should know voting models.

Course Contents

• The subject and methods of game theory. Conflicts and cooperation, their mathematical models.
• Matrix games. Saddle points. Mixed strategies. Minimax Theorem.
• Infinite two-person zero-sum games. Existence theorems
• Non-cooperative n-person games. Optimality concepts in non-cooperative games, equilibrium. Game-theoretic models of oligopolies. Auctions.
• The mixed extension of non-cooperative games. Nash’s Theorem on existence of equilibria in mixed strategies in finite n-person games.
• Refiniments of equilibria. Perfect equilibria, strong equilibria, correlated equilibria.
• Games with incomplete information. Bayesian equilibria.
• Games in extensive form. Zermelo's Theorem on the existence of pure equlibria in finite extensive games with perfect information. Behavioral strategies Kuhn's Theorem.
• Dynamic games. Stochastic and recursive games. Repeated games with complete information.
• Cooperative games with transferable utilities. Characteristic functions. Solutions of cooperative games. The core and its existence. The Shapley value.
• Cost and profit sharing rules. Egalitarian and utilitarian rules.
• Bargaining problems. Axiomatic characterizations of bargaining solutions.
• Social welfare functions. Arrow’s Theorem and its extensions.
• Voting theory. Manipulation of preferences.

Assessment Elements

• In-class tests and class participation
• Home assignments
• 2-hour written test
  The examination is conducted in writing using synchronous proctoring. The exam is conducted on the online HSE Moodle platform https://hse.student.examus.net. You must connect to the exam 15 minutes before the start. On the Examus platform, system testing is available. Student's computer must meet the requirements: To participate in the exam, the stuThe duration of the final exam is two academic hours. The examination is conducted in writing using synchronous proctoring. The exam is conducted on the online HSE Moodle platform (https://hse.student.examus.net). You must connect to the exam 15 minutes before the start. On the Examus platform, system testing is available. Student's computer must meet the requirements: (https://elearning.hse.ru/data/2020/05/07/1544135594/Технические%20требования%20к%20ПК%20студента.pdf) To participate in the exam, the student must: go to the proctoring platform in advance, conduct a system test, turn on the camera and microphone, and verify identity. During the exam, students are prohibited from: communicating (on social networks, with people in the room), writing off. During the exam, students are allowed to: use A4 sheets. The completed task must be photographed or scanned and downloaded to the Moodle system. Click the Finish Exam button to successfully save your answer. A short-term communication disruption during the exam is considered interruption of communication up to 10 minutes. A long-term communication disorder during an exam is considered to be a communication interruption of 10 minutes or more. In case of a long-term communication disruption, the student cannot continue to participate in the exam. The transfer procedure is similar to the surrender procedure.

Interim Assessment

• Interim assessment (4 module)
  0.6 * 2-hour written test + 0.2 * Home assignments + 0.2 * In-class tests and class participation

Bibliography

Recommended Core Bibliography

• Barron, E. N. (2013). Game Theory : An Introduction (Vol. Second edition). Hoboken, New Jersey: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=565752
• Binmore, K. G. (2007). Game Theory: A Very Short Introduction. New York: OUP Oxford. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=209659
• Webster, T. J. (2014). Analyzing Strategic Behavior in Business and Economics : A Game Theory Primer. Lanham, MD: Lexington Books. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=748851

Recommended Additional Bibliography

• Schmidt, C. (2003). Game Theory and Economic Analysis : A Quiet Revolution in Economics. London: Routledge. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=93028