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Spring 2017
ECON 804: Advanced Topics in Microeconomic Theory
Lectures: M 10:30-12:20, W 10:30-11:20 in WMC 3611
Instructor: Shih En Lu ([email protected])
Office Hours: W 12:10-13:00 in WMC 4661
Course Description
This course picks up where Econ 803 left off and starts with a few selected topics from dynamic
games. Then, we will introduce the theory of social choice. Here we learn about social
choice/welfare functions, the celebrated Arrow’s theorem, and the properties of some real-life
preference aggregation mechanisms such as majority voting. Finally, we will combine game
theory and social choice theory, and consider the problem of designing games in order to
generate a certain outcome. For example, how can a policy maker implement a (socially)
desirable allocation when she lacks some relevant knowledge? Our focus here will be on
dominant-strategy implementation and Bayesian implementation. We may cover additional
topics from game theory, time permitting.
Prerequisites: ECON 802 and 803, or equivalent.
Textbook: [MWG] Mas-Colell, A., Whinston, M.D. and Green, J.R., Microeconomic Theory,
Oxford University Press, 1995.
Recommended Textbooks:
[FT] Fudenberg, D. and Tirole, J., Game Theory, MIT Press, 1991.
[BD] Bolton, P. and Dewatripont, M., Contract Theory, MIT Press, 2005.
Additional resources may be recommended as the need arises.
Grading: Problem Sets (4) 4 points each 16%
Midterm February 27, in class, 1 hr 48 mins 36%
Final TBD, non-cumulative, 2 hr 24 mins 48%
(In case you’re wondering about the weird test durations and weights: it’s 1 point
per 3 minutes of testing time.)
Assignments: Four problem sets will be assigned and graded on a coarse scale from 0 to 4.
Show your work. The grading of problem sets is meant as a commitment device
to make sure you keep up with the material, NOT as an evaluation of your
performance. Thus you should:
- carefully go through the posted solutions on your own – I will not read
your solutions carefully and will likely miss some mistakes you make;
- feel free to see me in person if you have questions or want more detailed
feedback – I’m happy to discuss the problems and your solutions.
Tentative due dates: January 25, February 20, March 22 and April 3
Tentative Outline
Jan 4-16 (weeks 1-2) Dynamic Games: One-Stage Deviation Principle, Folk Theorem
(MWG 12.AA; FT 4.1-4.3, 5.1)
Markov Perfect Equilibrium (FT 13.1, 13.2)
Jan 18-Feb 8 (weeks 3-6) Social Choice and Cooperative Games (MWG 21, 22 and 18.AA)
Feb 13-17 Reading Week
Feb 27 Midterm on Material through Cooperative Games
Feb 20-Mar 15 (weeks 6-9) Mechanism Design (MWG 23)
Mar 20-29 (weeks 10-11) Hidden Information (MWG 14.C, BD 2)
Hidden Action (MWG 14.B, BD 4)
Apr 3-5 (week 12) Miscellaneous Topics, Catch-Up and/or Review
