L14001 Microeconomic Theory
Credits: 15
Module description and content
The module will cover the following topics.
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Individual Choice under Certainty
Preference relations, revealed preferences, consumer demand and duality
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Individual Choice under Uncertainty
Expected utility theory
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Extensive and Normal Form Games
Introduction, Definitions, Examples
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Game-theoretic Solution Concepts
Dominance, Equilibrium, Backward Induction, Subgame perfection
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Incomplete Information in Markets and Signalling
"Lemons" market, Job market signalling
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Herding
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Moral Hazard
Principal-agent model, Incentive schemes
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Adverse Selection
Competitive screening, Insurance market
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Mechanism Design
Monopolistic screening, Revelation principle, Pivot mechanisms
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Aims and objectives
The main aims for this module are:
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To introduce students to the technical tools required for understanding and developing microeconomic models of behaviour of optimising individuals
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To show how these tools facilitate the analysis of simple optimising models of choice and of the interaction of optimising individuals
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To provide some practice, through exercises, in the application of these technical tools.
On completing this module, students should be able to:
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demonstrate an understanding of some formal techniques of optimisation, game theory, and equilibrium analysis used to construct and investigate simple microeconomic models of individual behaviour
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use those techniques to analyse individual choices and their interaction in the context of simple models.
Emphasised learning outcomes (see masters handbook for details):
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A1 Demonstrate a broad and deep knowledge of advanced core areas of economics.
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A3 Show understanding of advanced analytical methods, both theory- and model-based.
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B2 Work with abstract concepts and in a context of generality.
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B3 Reason logically and work analytically.
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C2 Select and apply appropriate techniques to solve problems.
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D3 Analyse and solve complex problems accurately.
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Module downloads
Lecture slides and other material for this module can be found on WEBCT at http://webct.nottingham.ac.uk/webct/entryPage.dowebct - restricted to registered students only.
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Lectures and tutorials
Economics lecture timetables are available online in the Portal.
There are 30 lecture hours.
In addition there are 8 tutorials, at which you will be able to discuss exercises, problems arising from your attempts to do the exercises, your reading of the text, or problems arising from the lectures. Students are expected to prepare answers to tutorial exercises before coming to a tutorial. Tutorial times and places, and sign-up for them, will be available on Nexus.
You are also expected to work on your own through the material, including any additional sources, since lectures can cover only a limited amount.
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Module Assessment
The module is assessed entirely by means of an unseen 3-hour written examination.
Previous Examination Papers and Feedback for all modules can be viewed online in the Portal but are restricted to registered students only. A password may be required to access this material.
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Module Texts
The best texts for the materials of the module are:
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Kreps, D. (1990) A Course in Microeconomic Theory, Prentice Hall.
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Jehle, G., Reny, P. (2001) Advanced Microeconomic Theory, Pearson.
Other books that may be useful for some parts of the module are:
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Dutta, P. (1999) Strategies and Games, MIT Press.
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Rasmusen, E. (2007) Games and Information, 4th edition, Blackwell.
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Molho, I. (1997) The Economics of Information, Blackwell.
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Campbell, D. (2006) Incentives, 2nd edition, Cambridge Univeristy Press.
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Varian, H. (2010) Intermediate Mircoeconomics, Norton.
For a more advanced and comprehensive coverage of Microeconomic Theory, see:
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Mas-Colell, A., Whinston, M., Green J. (1995) Microeconomic Theory, Oxford University Press.
This list is not exhaustive. There are other Microeconomic Theory, Game Theory, and Information Economics books that you may find useful.
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Further Information
If you have any questions regarding this module please feel free to contact the lecturer. At the end of this semester, we would welcome your views on the organisation and content of this module.