ECONGP21 - Microeconomics for Policy
The aim of this course is to acquaint the student with the techniques and questions that arise in advanced Microeconomic Theory. Many, but not all, these techniques and questions are relevant to Policy debates. The principal difference between this course and a standard master’s level microeconomics course will be the greater emphasis placed on welfare economics and non-standard market structures. This emphasis will affect the material covered and the exercises the students will be required to complete.
1. The Theory of the Consumer: Preferences and Duality
In this section we will discuss preferences and their properties. The principles of rational choice. The nature of individuals, demand, expenditure and indirect utility functions. The nature of revealed preference. The aggregation of demand and choice under uncertainty.
2. The Theory of the Firm
In this section we study representations of technology and the: production, profit, costs and input demand functions of a firm.
3. General Equilibrium and Welfare
In this section we will study the market mechanism as an allocation device. The problem of existence of a competitive equilibrium in pure exchange and in production economies. The multiplicity of competitive equilibrium and its welfare properties will also be examined. Then, we examine imperfections that arise from the existence of externalities and public goods:
4. An Introduction to Game Theory
In this section we introduce games of complete and incomplete information in strategic and extensive form as well as the equilibrium concept of Bayes-Nash equilibrium and its dynamic extensions.
5. Incomplete information and Incentives
In this section we examine the effects of adverse selection and moral hazard have on markets and standard economic models. In particular we will interest ourselves in the role moral hazard and adverse selection has in private and state-run insurance schemes.
6. Mechanism Design
Here we introduce the problem of a planner trying to elicit information to allocate resources effectively. We will study bargaining, auctions and preference elicitation more generally.
Ian Preston & Martin Cripps
|Assessment:||Three hours of lectures per week, and one weekly problem class, throughout Term 1. Three-hour closed-book examination in Term 3. Assessment is based solely on the final examination, but a serious attempt at the problems is essential to a good understanding of the material.|