Aims

Semester 1 aims: To provide an overview of modern microeconomics at an advanced undergraduate level by extending the analysis of perfectly competitive markets, considering the effects of: missing markets and trade frictions, market power, time, uncertainty and strategic interaction.

Semester 2 aims: To introduce students to the study of economic behaviour under asymmetric information and to analyse the welfare implications of asymmetric information on market outcomes.

Outline Of Syllabus

Semester 1 Syllabus:

TOPIC 1: General Equilibrium and Welfare Economics
Exchange and Competitive Equilibrium. Welfare Theorems.

TOPIC 2: Market Power and Missing Markets
Monopoly and oligopoly. Externalities

TOPIC 3: Cooperative Game Theory and Core Convergence

TOPIC 4: Strategic Interaction.
Non-cooperative game theory. Strategic equilibria in static and dynamic games.

TOPIC 5: Repeated Games.
The Folk Theorem.

TOPIC 6. Bargaining
Cooperative (Nash) bargaining. Strategic bargaining.

TOPIC 7: Uncertainty and Trade Frictions
Search theory. Market equilibrium with trade frictions.


Semester 2 Syllabus:

TOPIC 1: Search and Matching
Equilibrium price dispersion. Matching.

TOPIC 2: Hidden Information
Adverse selection in labour, goods and insurance markets.

TOPIC 3: Screening
Screening contracts in labour and insurance markets.

TOPIC 4: Signalling
Signalling in labour, goods and financial markets.

TOPIC 5: Hidden Action
Moral hazard in labour and insurance markets. Contract theory

TOPIC 6: Auctions
First-price and second-price auctions.

TOPIC 7: Bargaining
Bargaining with incomplete information.

Teaching Rationale And Relationship

1.Lectures provide an in-depth presentation of theoretical models and required techniques, as well as guidance on how to apply the analysis to real-world economic situations.

2.Seminars take students through applications of lecture material and provide solutions to problem sets done in independent study.

3.Independent study involves following up reading list references and practicing analytical skills.

Assessment Rationale And Relationship

Exam tests understanding of advanced Microeconomic theories and their application to real market situations.