Course syllabus

COURSE SYLLABUS (1^st Half)

Fall, 2004

Course: ECON 631-600: Microeconomic Theory II – 1^st Half
Instructor: Guoqiang Tian

Professor of Economics

Phone: [phone]

E-mail: [e-mail]

http://econweb.tamu.edu/tian
Lectures: MW 11:55 am – 1:10 pm

ALLN 3067

Office Hours: MW 3:30-4:45 pm or by appointment

ALLN 3090

Text: The course will be mainly based on my lecture notes and will use two textbooks and a number of other readings. The textbooks are J. Laffont and D. Martimort, The Theory of Incentives, and A. Mas Colell, M. D. Whinston, and J. Green, Microeconomic Theory. The lecture notes can be obtained downloading from my website.

Grade for 1^st Half : You will be evaluated on the basis of a series of homework problems and one midterm. Homework will be handed out periodically. Your grade will be calculated using the method list below.
Homework: 20%

Exam : 80%

Course Objectives: The first half of the course covers topics in information economics and mechanism design. The purpose of the course is to introduce some advanced theories and analytical tools and the types of questions that are used and answered in each area. The topics covered in this course are important since they are either basic analytical tools that are used in many fields of economics or basic economic theories that will be needed in your future study and research.

ADA Policy Statement: The Americans with Disabilities Act (ADA) is a federal anti-discrimination statute that provides comprehensive civil rights protection for persons with disabilities. Among other things, this legislation requires that all students with disabilities be guaranteed a learning environment that provides for reasonable accommodation of their disabilities. If you believe you have a disability requiring an accommodation, please contact the Department of Student Life, Services for Students with Disabilities, in Cain Hall or call 845-1637.

Academic Integrity Statements: “An Aggie does not lie, cheat, or steal or tolerate those who do.”

Prerequisites: ECON 629 and ECON 630

Tentative Topics Outline:
The first half of the lecture is covers topics in Information, Incentives, and Mechanism Design: Principal agent model, hidden action, moral hazard, adverse selection, signaling, contract theory, incentives and information of an economic system, economic mechanism design, implementation in Nash equilibrium and in Bayesian equilibrium, truth telling and dominant mechanism, the pivot mechanism, optimal dominant mechanisms, and the revelation principle.
Readings: Chapters 1-5 of Laffont and Martimort, Chapters 13-14 and Chapter 23 of Mas Colell, Whinston, and Green, and Chapters 12-14 of my lecture notes.

1. 
   G. Akerlof, “The Market for Lemons: Quality Uncertainty and the Market Mechanism,” Quarterly Journal of Economics, 89 (1976), 400 500.
   

2. 
   L. C. Corchon, The Theory of Implementation of Socially Optimal Decisions in Economics, St. Martin’s Press, 1996.
   

3. 
   S. Grossman and O. Hart, “An Analysis of the Principal Agent,” Econometrica, 51 (1983), 7 45.
   

4. 
   M. Jackson, “A Crash Course in Implementation Theory,” Social Choice and Welfare 18 (2001), 655-708.
   

5. 
   M. Jackson, “Mechanism Theory,” Caltech, 2001, website: http://www.hss.caltech.edu/~jacksonm/mechtheo.pdf
   

6. 
   J. J. Laffont, “The New Economics of Regulation Ten Years After,” Econometrica 62 (1994), 507 538.
   

7. 
   Thomas R. Palfrey, “Implementation Theory,’’ in Handbook of Game Theory, Vol. III (Robert Aumann and Sergiu Hart eds.), website: http://www.hss.caltech.edu/%7Etrp/implement.pdf
   

8. 
   E. Wolfstetter, “Topics in Microeconomics - Industrial Organization, Auctions, and Incentives,” Cambridge Press, 1999, Chapters 8-10.