Kreps Micro Foundations List Chapters

8/10/2019 Kreps Micro Foundations List Chapters

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Microeconomic Foundations I

Choice and Competitive Markets

David M. K reps

PRINCETON UNIVERSITY PRESS PRINCETON N D OXFORD


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Contents

Preface xiii

Chapter One. Choice, Preference, an d Utility 11.1. Co nsum er Choice: The Basics ~ 11.2. Prov ing Mo st of Pro position 1.2, an d More 51.3. The No -Better-Than Sets an d Utility Rep resentation s 71.4. Strict Preference an d Indifference 9

1.5. Infinite Sets an d Utility Represen tations 101.6. Choice from Infin ite Sets 151.7. Eq uivalen t Utility Repres entations 171.8. Co mmentary 18Bibliographic N ote s 23Problems 23

Chapter Two. Structural Properties of

Preferences and Utility Functions 302.1. Mo notonicity 312.2. Convexity 322.3. Continuity 352.4. Indifference Curv e Diag ram s 382.5. W eaBand Ad ditive Separability 392.6. Qu asi-linearity 432.7. Ho motheticity 44Bibliographic N ote s 45

Problems ; ,45

Chapter Three. Basics of Consum er Dem and 503.1. The Co nsu m er's Problem 503.2. Basic Facts abo ut the C P 523.3. The Marshallian De m and Correspon dence

and Indirect Utility Fun ction 543.4. Solving the CP w ith Calcu lus 56Bibliographic Notes 63Problems 64


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viii Contents

Chapter Four. Revealed Preference and Afriat's Theorem 674.1. An Exam ple and Basic Ideas 674.2. GARP and Afriat's Theorem 704.3. Com parative Statics an d the Ow n-Price Effect 74

Bibliographic Notes 77Problems 78

Ch apter Five. Choice un de r U ncertainty 795.1. Two M odels and Three Representations 795.2. The Mixture-Space Th eorem 895.3. States of N atu re an d Subjective Expec ted Utility 1015.4. Subjective and Objective Probab ility and the H arsan yi Do ctrine 108

5.5. Em pirical and Theo retical Critiqu es 110Bibliographic N otes 116Problems 116

C hapte r Six. Utility for M oney 1236.1. Prop erties of Utility Fun ctions for Money 1236.2. Ind uced Preferences for Incom e ' 1346.3. Dem and for Insurance and Risky Assets 138Bibliographic N otes 140Problems 140

Ch apter Seven. Dy nam ic Choice 1487.1. The Stand ard Strategic Ap proach 1497.2. Dyn amic Prog ram m ing 1527.3. Testable Restrictions of the Stan dard M odel 1537.4. Three A lternatives to the Stan dard M odel 156Bibliographic N otes 161Problems 161

Chap ter Eigh t. Social Choice an d Efficiency 1668.1. A rrow 's Theorem 1668.2. W hat Do We Give Up? 1728.3. Efficiency 1758.4. Identifying the Pareto Frontier: Utility Imputations

and Bergsonian Social Utility Fu nction als 1768.5. Syndicate Theory and Efficient Risk Sharing:

A pply ing Propo sition 8.10 1848.6. Efficiency? 192Bibliographic N otes 194Problems 194


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Contents ix

Chapter Nine. Competitive and Profit-Maximizing Firms 1979.1. The Produc tion-Possibility Set 1989.2. Profit Maxim izatio n 1999.3. Basics of the Firm 's Profit-Maximization Problem 201

9.4. Afriat's Theorem for Firm s 2079.5. From Profit Function s to Produ ction-P ossibility Sets 2119.6. How M any Pro duction -Possibility Sets

Give the Same Profit Function? 2139.7. What Is Going O n Here, Mathem atically? 2169.8. Differentiability of th e Profit Function^ ' 2199.9. Cost Minimization and Inpu t-Requ irem ent Sets 2229.10. Why Do We Care? - 228Bibliographic Notes 229Problems 229

Chapter Ten. The Expenditure-Minimization Problem 23310.1. Defining the EMP 23310.2. Basic Analysis of the EMP , 23510.3. Hicksian Dem and and the Expen diture Func tion 23610.4. Properties of the Ex pend iture Function 23810.5. How Many Con tinuous U tility Functions

Give the Same Ex pend iture Fun ction? 24010.6. Recovering Co ntinu ous Utility Functions

from Expenditure Fun ctions 24710.7. Is an Alleged Expenditure Function R eally an Exp enditure Fu nction? 24810.8. Co rrecting the CP and the EMP 254Bibliographic Notes 255Problems 255

Chapter Eleven. Classic Demand Theory 25811.1. Roy's Identity and the Slutsky Equation 25811.2. Differentiability of Ind irec t Utility 26211.3. Duality of Utility an d Indirec t Utility 26911.4. Differentiability of Marshallian Dem an d '27411.5. Integrability 27911.6. Com plements and Substitutes 28311.7. Integrability and Revealed Preference 284

Bibliographic Notes 286Problems . 287

Chapter Twelve. Producer and Consumer Surplus 28912.1. Producer Su rplus 289


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x Contents

12.2. Co nsu m er Su rplus 296Bibliographic N otes 304Problems 304

Chapter Thirteen. A ggregating Firms and C ons um ers 30613.1. Ag gregating Firms 30713.2. Agg regating Con sum ers 31013.3. Convexification thro ug h Ag gregation 318Bibliographic N otes 326Problem s ' 326

Chapter Fou rteen. General Eq uilibrium 32914.1. Definitions 32914.2. Basic Prope rties of W alrasian Eq uilibrium 33314.3. The Ed gew orth Box 33514.4. Existence of W alrasian Eq uilibria 33814.5. The Set of Equ ilibria for a Fixed Econom y 35114.6. The Equ ilibrium Co rrespondenc e 354Bibliographic N otes 354Problems 355

Chapter Fifteen. Genera l Equ ilibrium , Efficiency, and the Core 35815.1. The First Theorem of Welfare Econ om ics 35915.2. The Second Th eorem of Welfare Econom ics 36215.3. W alrasian Equ ilibria Are in the Co re 36615.4. In a arge En oug h Economy, Every C ore Allocation

Is a W alrasian-Eq uilibrium Allocation 37015.5. Externalities and Lind ahl Eq uilibrium 380Bibliographic N otes 383

Problems , 383

Chapter Sixteen. Gen eral Eq uilibrium, Time, and U ncertainty 38616.1. A Fram ewo rk for Time and Un certainty 38616.2. General Equ ilibrium w ith Time and Un certainty 38916.3. Equilibria of Plans, Prices, an d P rice Ex pectations:

I. Pure Exchange w ith Co ntingent Claims 39216.4. EPPPE: II. Co m plex Financial Securities an d Co m plete M arkets 40216.5. EPPPE: III. Com plex Securities with Real D ividen ds

and Com plete M arkets 41816.6. Incom plete M arkets 41916.7. Firms 424Bibliographic N otes 431Problems ' 432


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Contents xi

About the A ppend ices 437

Appendix On e: M athem atical Induc tion 439

Appendix Two: Some Simple Real A nalysis 441A2.L The Setting 441A2.2. Distance, Neigh borhoo ds, and O pen and Closed Sets 441A2.3. Sequences and Limits 445A2.4. Boun dedness, (Completeness), and Co mp actness 446A2.5. Con tinuous Functions 447A2.6. Simply Connected Sets and the Intermediate-Value Theorem 448A2.7. Suprema and Infima; Maxes and Mins 448

A2.8. The Maxim um of a Co ntinuou s Function on a Com pact Set 449A2.9. Lims Sup and Inf 450A2.10. Upper and Low er Sem i-continuous Functions ' 451

Appendix Three: Co nvexity 452A3.1. Convex Sets 452A3.2. The Separating- and Sup porting-H yperplane Theorem s 457A3.3. The Support-Function Theorem 459

A3.4. Concave and Convex Functions 461A3.5. Quasi-concavity and Quasi-convexity 463A3.6. Supergradients and Sub gradients 466A3.7. Concave and Convex Functions and Calculus 468

Appendix Four: Correspo ndences 469A4.1. Functions and Co rrespondences 470A4.2. Con tinuity of Co rrespondences 471

A4.3. Singleton-Valued Corresponden ces and Continuity 474A4.4. Parametric Constrained O ptimization Problems

and Berge's Theorem 475A4.5. Why this Terminology? 477

Appendix Five: Co nstrained O ptimization 479

Appendix Six: Dy nam ic Pro gram m ing 485A6.1. Several Exam ples 485A6.2. A General Form ulation 489A6.3. Bellman's Equation 494A6.4. Conserving and Un improvab le Strategies 496A6.5. Additive Rew ards 501

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