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., 12:30-2:00


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 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. You must bring ythe completedtake-home portion of the exam to class (I urge you to make a copy). Under no circumstances are you to give your exam to someone else to turn in for you.

 

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

 

        Dilbert: Prisoners' Dilemma

       

        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


    


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).



First exam approximately Feb 12th - Feb. 17th

Spring 2007 Exam #1

Spring 2008 Exam #1

Spring 2009 Exam #1

Spring 2010 Exam #1

Spring 2011 Exam #1

Spring 2012 Exam #1

Spring 2013 Exam #1

Spring 2014 Exam #1



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.

Maskin Eric and Jean Tirole, "The Principal-Agent Relationship with an Informed Principal, II: Common Values" Econometrica (1992) 60: 1-42.


Lecture Notes #5


    


      Read about John Harsanyi

      Handout comparing types of equilibria

      Mas-Colell shares award

      Game tree for the employment game

Lecture Notes #6


    


Lecture Notes #7

      

      Email about Alissa's question

Lecture Notes #8

      Notes on Nash equilibria in screening games

      

      Diagrams concerning breaking "equilibria."


Second exam approximately March 26th - March 31th

Spring 2007 Exam #2

Spring 2008 Exam #2 [Don't try Q3 - it is intractable]

Spring 2009 Exam #2

Spring 2010 Exam #2

      Responses to questions

Spring 2011 Exam #2

Spring 2012 Exam #2

Spring 2013 Exam #2

Spring 2014 Exam #2


III. Applications: Asymmetric Information: Moral Hazard

Mas-Colell, Whinston, and Green, Chap. 14.


Stiglitz, Joseph E., "Information and the Change in Paradigm in Economics" Nobel Lecture.

Hart, Oliver D. And John Moore, "Foundations of Incomplete Contracts" Review of Economic Studies (1998) 66: 115-138.

Tirole, Jean, "Incomplete Contracts: Where do we Stand?" Econometrica (1999) 67: 741-781.


Lecture Notes #9

      

      Weierstrass Theorem

      Spreadsheets: Moral Hazard I and Moral Hazard II

      Solution to Homework 7-1.

Lecture Notes #10

      Moral hazard calculations

      

    


    


IV Mechanism design


      Mas-Colell, Whinston, and Green, Chap. 23.


      Sonnenschein, Hugo, "Economics of Incentives: An Introductory Account" (1983)

      Hartline, Jason, "Lectures on Optimal Mechanism Design" (2006)

      Prize Committee of the Royal Swedish Academy of Sciences, "Mechanism Design Theory" (2007)

      Jackson, Matthew O., "A Crash Course in Implementation Theory" Social Choice and Welfare 2001 (18) 655-708.

      Maskin, Eric and Tomas Sjöström, "Implementation Theory" Vol. 1 of Handbook of Social Choice and Welfare.


Third Exam: April 28th - May 1st

Spring 2007 Third Exam

Spring 2008 Third Exam

Spring 2009 Third Exam

Spring 2010 Third Exam

Spring 2011 Third Exam

Spring 2012 Third Exam

Spring 2013 Third Exam

Spring 2014 Third Exam



Links:


Gambit Software


David Levine's Economic and Game Theory Page


Al Roth's Game Theory and Experimental Economics Page


Ariel Rubinstein's Page with Game Theory


MIT Game Theory Courses:

14.122 (Ellison)

14.123 (Yildiz)

14.124 (Holmstrom)

14.126 (Manea and Yildiz)

14.147 (Yildiz)


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