Advanced Microeconomics II

Recommended Prerequisites

Basic microeconomics and mathematics (derivatives, , simple integrals and constrained optimization

Teaching Methods

The course is based on classroom teaching with lots of interaction between the teacher and the students. The continuous evaluation is based on homework and one written test. The homework consists of several sets of practical and analytical problems that the students should solve and deliver during the course.

Learning Outcomes

1. To interpret and apply in different settings the several definitions and refinements of equilibrium in Game Theory.

2. To apply game theory in models of imperfect competition.

3. Interpret the recent developments on the theory of the firm, markets and contracts

Work Placement(s)

No

Syllabus

1. Static games with complete information

1.1. Normal form games

1.2. Nash equilibrium

1.3. Mixed strategies

2. Dynamic games with complete information

2.1. Backwards induction

2.2. Subgame perfection

2.3. Repeated games

3. Static games of incomplete information

3.1. Bayesian games

3.2. Bayesian Nash equilibrium

4. Dynamic games of incomplete information

4.1. Perfect Bayesian equilibrium

4.2. Signaling games

5. Topics in contract theory

5.1. The principal-agent model

5.1.1. Adverse selection

5.1.2. Moral hazard

5.1.3. Signaling

5.2. Incomplete contracts

Head Lecturer(s)

Nuno Miguel Barateiro Gonçalves Silva

Assessment Methods

Assessment
The continuous evaluation: homework (30%) and one written test (70%): 100.0%

Bibliography

DIXIT, Avinash, K.- Games of strategy, New York; W. W. Norton & Company, 2009.

FUDENBERG, Drew ; TIROLE, Jean - Game theory. Cambridge, Mass : MIT Press, 1991.

GIBBONS, Robert - A primer in game theory. New York : Harvester Wheatsheaf, 1992.

MAS-MAS-COLELL, Andreu, Michael D. Whinston, Jerry R. Green – Microeconomic Theory, Oxford University Press, 1995

OSBORNE, Martin J.- A course in game theory, Cambridge, Mass, MIT Press, 1994.

RASMUSEN, Eric- Games and information: An introduction to game theory, Blackwell Publishing,2007.