20296 - ADVANCED MICROECONOMICS
Department of Economics
NICOLA PAVONI
Suggested background knowledge
Mission & Content Summary
MISSION
CONTENT SUMMARY
The course is divided into two main sections. In the first part, General Competitive Analysis is developed both in its positive and normative dimensions. In the second part of the course, the problem of designing efficient allocation mechanisms is studied in a general perspective. Incomplete information and incentives issues are introduced.
- PART 1: Competitive Equilibrium, Pareto Optimality, and Asset Pricing.
- Nonlinear Optimization and the Consumer Problem: a Review.
- Pure Exchange Competitive Equilibrium.
- First and Second Welfare Theorems.
- General Equilibrium with Uncertainty.
- A Primer on Asset Pricing.
- PART 2: Theory of Contract, Incentives and Behavior.
- Hidden information: screening.
- Hidden action: moral hazard.
- Signalling and Competitive Screening.
- Introduction to Mechanism Design.
- Optimal income taxation.
- Applications to financial and labour contracting.
- Introduction to Dynamic Contracts.
- Introduction to Behavioural Economics
Intended Learning Outcomes (ILO)
KNOWLEDGE AND UNDERSTANDING
At the end of the course the student will be familiar with the most widely used models of competitive equilibrium, finance and private information together with applications to the labor, the credit and the financial markets, as well as applications to the theory of optimal taxation.
APPLYING KNOWLEDGE AND UNDERSTANDING
- Solve for the competitive equilibrium of an economy and for the optimal allocation under various assumption of asymmetric information between agents.
- FOR EXAMPLE:
- Aproach in a formal way the problem of global warming
- Understand the role of down payment and imperfect coverage in insurance markets.
- Understand the functioning of financial markets and interpret what happening during the financial crisis using formal microeconomic models.
- Interpret and evaluate the current discussion on labor and capital income taxation through the lents of formal models.
- Interact in a constructive way and think formally.
Teaching methods
- Face-to-face lectures
- Exercises (exercises, database, software etc.)
- Case studies /Incidents (traditional, online)
- Individual assignments
- Group assignments
DETAILS
During the course, the students are able to test their knowledge and understanding of the material by mean of a series of problem sets which are solved in class. In order to facilitate the teaching assistant in the evaluation of the problem sets, we encourage them to be written using a scientific editor (such as, for example, TeX, LaTeX, Lyx, ScientificWorkplace, Scientifc Word, or World with equation editor) and printed or handed in pdf format. The students will have the oportunity to study a concrete (real world) economic problem by formalizing the most useful setup and possibly indicating the appropriate data.
Assessment methods
Continuous assessment | Partial exams | General exam | |
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ATTENDING AND NOT ATTENDING STUDENTS
The form of the general exam is exclusively written. Problem sets and take home group assignments contribute to the final grade.
Teaching materials
ATTENDING AND NOT ATTENDING STUDENTS
- Examination is based on topics and exercises presented during the course.
- Slides and other teaching material are distributed during the course.
- The teacher provides lecture notes and detailed indications on charpter and sections from the following textbooks:
- P. BOLTON, M. DEWATRIPONT, Contract Theory, MIT press.
- T. BORGERS, An Introduction to the Theory of Mechanism Design, Oxford University Press.
- J.H. COCHRANE, Asset Pricing, Princeton University press.
- J.J. LAFFONT, D. MARTIMORT, The Theory of Incentives, Princeton University press.
- I. MACHO-STADLER, J.D. PEREZ-CASTILLO, An Introduction to the Economics of Information: Incentives and Contracts, Oxford University press.
- A. MAS-COLELL, M. WHINSTON, J.R. GREEN, Microeconomic Theory, Oxford University press.
- B. SALANIE, The Economics of Contracts, MIT press.
- J. Y. CAMPBELL, Financial Decisions and Markets. A Course in Asset Pricing, Princeton University Press.