ECO5020F - Advanced Microeconomics

Course Information

Syllabus

This is a course in economic theory, covering consumer theory, production, uncertainty, general equilibrium, game theory, oligopoly, and introduction to contracts, with selected applications to economic policy and business decisions. The level, readings, and format represent a condensed version of what has become the international standard for the graduate sequence in core microeconomic analysis at the masters and doctoral level. Basic to intermediate mathematic tools (from calculus, linear algebra, basic probability, and some rudiments of analysis) will be used extensively in order to present economic ideas with clarity and conciseness. Candidates should note that the course is analytically demanding and relatively intense, and will be expected to read the material before classes. Detailed reading lists will be provided by the instructors.

Main texts

• Mas-Colell, Andreu, Michael Whinston, and Jerry Green: Microeconomic Theory, Oxford University Press, 1995. [MWG] {This is the required text - available at the UCT bookshop}
• Varian, Hal: Microeconomic Analysis, 3rd edition, Norton, 1992. {Not as complete as MWG, but useful supplementary reading for Part 1}
• Fudenberg,D., & J. Tirole (1996). Game Theory. MIT Press: Cambridge, Massachusetts (=FT)

Instructors

Part 1:
Professor Haim Abraham:
Email: habraham@commerce.uct.ac.za
Office: Room 4.58, Leslie Social Sciences Building.

Part 2:
Alexander Zimper:
Email: Alexander.Zimper@uct.ac.za
Phone: (+27 21) 650 4362
Office: Room 5.59, Leslie Social Science
Site: http://www.commerce.uct.ac.za/Economics/staff/azimper/default.asp

Outline and required reading

Part 1: Competitive Equilibrium Analysis

• Consumer theory [MWG: M.A-M.F, M.J-M.L, 1, 2, 3, 4B]
• Production [MWG: 5]
• General equilibrium [MWG: M.G, M.I, 10, 15, 16, 17, 18B]

Part 2: Analysis of Strategic Behaviour

• The Strategic Form Representation; Nash Equilibrium; Existence
  MWG: 7.D, 8.D, Appendix A of Chapter 8 & Mathematical Appendix.
  FT: 1 
  [Download]
• Choice under Risk; Expected Utility Theory
  MWG: 6.A, 6.B, 6.C. 
  [Download]
• The Expected Utility Theorem; Ellsberg; Mixed Strategy Sets
  MWG: 6.A, 6.B, 6.C., 6F 
  [Download]
• Dominated Strategies; Best Responses; Iterated Solution Concepts
  MWG: 8.B, 8.C
  FT: 2 
  [Download]
• Bayesian Games; A Stylized Example: A Two-Player Bank Run Model
  MWG: 8.E
  FT: 6
  [Download]
• Mechanism Design; Bayesian Implementation; Revelation Principle
  MWG: 23.D
  FT: 7.1, 7.2
  [Download]

Note that although we intend to follow the above outline quite closely, modifications might be made during the course. In particular: specific sub-sections of required chapters may not be required; and additional readings may be prescribed.