Readings

Key to textbooks used in the course:

MWG = MasColel, A., M. Whinston, and J. Green. Microeconomic Theory. Oxford University Press, 1995.

Kreps = Kreps, D. A Course in Microeconomic Theory. Princeton University Press, 1990.

Varian = Varian, H. Microeconomic Analysis. 3rd ed. W. W. Norton Company, 1992.

LEC # TOPICS READINGS
1-4 Choice Under Uncertainty

MWG. Chapter 6 C-D, pp. 183-199.

Kreps. Chapters 3.2-3, pp. 81-98.

Varian. Chapters 11.5-7, pp. 177-190.

Holmstrom, B. "Lecture Note: Decision Making Under Uncertainty - Experiments and Value of Information".

Rothschild, M., and J. Stiglitz. "Increasing Risk I: A Definition." Journal of Economic Theory 2 (1970).

Wilson, R. "The Theory of Syndicates." Econometrica 36, no. 1 (1968): 119-132.

Rabin, M. "Risk Aversion and Expected-Utility Theory: A Calibration Theorem." Econometrica 68, no. 5 (2000): 1281-92.

Recommended:
Hirshleifer, J., and J. Riley. The Analytics of Uncertainty and Information. Cambridge University Press, 1992, Chapter 5.

5-6 Moral Hazard

MWG. Chapter 14.

Kreps. Chapter 16.

Varian. Chapter 25.4.

Hart, O., and B. Holmstrom. "The Theory of Contracts." In T. Bewley (ed.), Advances in Economic Theory -- Fifth World Congress. Cambridge University Press, 1987.

7-8 Adverse Selection; Signaling

MWG. Chapter 13 A-C, pp. 436-459.

Kreps. Chapters 17.1-3, pp. 625-650.

Varian. Chapters 25.9-11, pp. 468-471.

Akerlof, G. "The Market for Lemons: Qualitative Uncertainty and the Market Mechanism." Quarterly Journal of Economics 84, no. 3 (1970): 488-500.

9-10 Adverse Selection; Screening

MWG. Chapter 13 D, pp. 460-467.

Kreps. Chapter 17.2, pp. 629-645.

Varian. Chapters 25.6-9, pp. 457-469.

Rothschild, M., and J. Stiglitz. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information." Quarterly Journal of Economics 90, no. 4 (1976): 629-649.

11-12 Mechanism Design

MWG. Chapter 23 A-D, pp. 857-891.

Kreps. Chapter 18, pp. 661-713.

Varian. Chapter 23, pp. 414-431.