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The purpose of the course is to extend the introductory analyses considered in previous microeconomic courses. A major focus of the course is an attempt to add realism and to study situations in which agents make decisions under uncertainty and situations in which decision-makers interact. The first part of the course is mainly concerned with the study of simultaneous equilibria in a group of related markets (general equilibrium models), analyzing economic problems where agents face uncertainty about the outcomes of their choices, and economic problems where agents have to make a sequence of decisions over time (intertemporal choices). The second part is devoted to the study of game theory and will provide tools that can be used in a wide range of situations: e.g. firms competing for business, bidders competing in auctions, the role of threats, rewards and punishments in long-term relationships. The course will also introduce students to the consequences of informational asymmetries on individuals' and firms' decisions. The objective is to understand how imperfect information affects the optimal design of contracts between interacting agents, thus leading to market failures, as well as to introduce the mechanisms which can be implemented to overcome those failures. The techniques developed in this part of the course are also used in a wide range of disciplines, in which designing contracts in a world with informational asymmetries is crucial: e.g. regulation of firms by a governmental agency, personnel economics, insurance-, and financial markets.
At least 5 assignments in each quarter should be handed in and approved for admission to the exam.
1. Choice under uncertainty and intertemporal choice
2. Strategic Behavior, applied game theory
3. Contract Theory, Asymmetric Information
After completing this course, the students should be able to
- Analyze economic problems involving uncertainty and intertemporal economic problems
- Translate economic problems into formal game forms and analyze them
- Identify and reflect upon the information structure of a problem
- Reflect upon the game theoretic equilibrium concepts and their relevance for a given economic problem
- Identify and reflect upon the main problems caused by asymmetric information
- Analyze economic models of contracts and reflect upon the underlying assumptions
Microeconomics 1, Calculus 1 and 2, Mathematical Analysis 1, Linear Algebra and Convex Sets.
Christos Ntantamis
4 hours of lectures and 2 hours of tutorials per week.
Gibbons, R. (1992). A Primer in Game Theory, Harvester Wheatsheaf, Hemel
Varian, H. (1992). Microeconomic Analysis. Third Edition, New York, Norton
Salani, B. (2005). The Economics of Contracts: A Primer. Second edition, Cambridge, Massachusetts: The MIT Press
Not yet determined
2nd quarter
Institute of Economics
A 4-hour written examination. All usual means of aid are allowed, but the use of electronic equipment is not allowed. The evaluation is with an external examiner and uses the Danish grading scale (the 7-point scale).
