ECN 611

ECN 611:

MICROECONOMIC THEORY

Tues, Thurs., 9:30 - 10:50 Eggers 112

Mr. Kelly 312 Maxwell Hall 443-2345 jskelly@max.maxwell.syr.edu (see Vita)

Office Hours: Tues, Thurs., 12:30-3:00

Prerequisite: ECN 601 (PhD)

Text: Mas-Colell, Andreu; Michael D. Whinston; and Jerry R. Green, Microeconomic Theory

(NY: Oxford Univ Pr, 1995)

Content:

The subject of the course is the game theoretic portion of microeconomics with an emphasis on issues of information. We examine static and dynamic games, each with both symmetric and asymmetric information. Applications will cover auctions, contracts, signaling, insurance, matching, and incentives.

Administration:

This is a lecture-and-problems course. Course grades will be based on three equally weighted non-cumulative take-home problem exams. There are no make-up assignments and no extra credit assignments will be given. There will be homework problems that will be marked but not graded.

All Syracuse University policies and procedures concerning academic honesty apply to this course.

The Syracuse University Academic Integrity Policy holds students accountable for the integrity of the work they submit. Students should be familiar with the Policy and know that it is their responsibility to learn about instructor and general academic expectations with regard to proper citation of sources in written work. The policy also governs the integrity of work submitted in exams and assignments as well as the veracity of signatures on attendance sheets and other verifications of participation in class activities. Serious sanctions can result from academic dishonesty of any sort. For more information and the complete policy, see http://academicintegrity.syr.edu

While homework problems may be done cooperatively, exams are individual work and evidence of cooperating on exams will result in an exam grade of 0.

Students who are in need of disability-related academic accommodations must register with the Office of Disability Services (ODS), 304 University Avenue, Room 309, 315-443-4498. Students with authorized disability-related accommodations should provide a current Accommodation Authorization Letter from ODS to the instructor and review those accommodations with the instructor. Accommodations, such as exam administration, are not provided retroactively; therefore, planning for accommodations as early as possible is necessary. For further information, see the ODS website, Office of Disability Services

ASSIGNMENTS (see paper syllabus)

I. Game Theory

Mas-Colell, Whinston and Green, Chaps. 7, 8, and 9.

Newman, Peter, "Common Knowledge and the Game of Red Hats" Indian Economic Review (1992) 27: 451-457.

Osborne, Martin and Ariel Rubinstein, Bargaining and Markets, Chap 3, “The Strategic Approach: A Model of Alternating Offers,” 29-68. [Available on Rubinstein’s web site; see below]

Reference collection of normal-form games

Lecture Notes #1

Hamermesh: NYT Game

Roger Myerson defense of explanatory power of Nash equilibrium

Wikipedia on Prisoner's dilemma

Iterated Strict dominance equilibrium

Effect of adding a new strategy

Homework #1

Homework #2

Lecture Notes #2

Reference collection of game trees

Lecture Notes #3

The Mary/Tom bidding game tree

Homework #

Lecture Notes #4

Bargaining analysis

Extracurricular: Common knowledge:

A. Easy: da Costa Werlang, Sergio Ribeiro, "Common Knowledge" The New Palgrave: Game Theory (1989, Norton) 74-85.

B. Still easy: Geanakoplos, John, "Common Knowledge" Journal of Economic Perspectives (1992) 6: 53-82.

C. Harder: Geanakoplos, John, "Common Knowledge" Chapter 40 in the Handbook of Game Theory with Economic Applications, Vol. 2, ed. by R. J. Aumann and Sergiu Hart (Elsevier, 1994) 1437-1496.

D. Pop culture version: Chwe, Michael Suk-Young, Rational Ritual (Princton U Pr, 2001).

Exam Feb 16 - Feb. 23

II. Applications: Asymmetric Information: Adverse Selection

Mas-Colell, Whinston, and Green, Chap. 13.

Spence, A. Michael, "Signaling in Retrospect and the Informational Structure of Markets" American Economic Review (2002) 92: 434-459.

Sanford J. Grossman and Oliver D. Hart, “An Analysis of the Principal-Agent” Econometrica (1983) 51: 7-45.

Maskin Eric and Jean Tirole, "The Principal-Agent Relationship with an Informed Principal, I: The Case of Private Values" Econometrica (1990) 58: 379-410.