Courses
[ Econ 300 ] [ Econ 414 ] [ Econ 415 ] [ Econ 603 ] [ Econ 703 ]
The methodology
of economics employs mathematical and logical tools to model and analyze
markets, national economies, and other situations where people make choices.
Understanding of many economic issues can be enhanced by careful application of
the methodology, and this in turn requires an understanding of the various
mathematical and logical techniques. The course reviews concepts and techniques
usually covered in algebra, analytical geometry, and the first semester of
calculus. It also introduces the components of subsequent calculus and linear
algebra courses most relevant to economic analysis. The reasons why economists
use mathematical concepts and techniques to model behavior and outcomes are
emphasized throughout. The course will meet three times a week, twice for
lectures and once in discussion section conducted by a teaching assistant.
Lectures will expand on material covered in the text, stressing the reasons why
economists use math and providing additional explanation of formal mathematical
logic. Discussion sections will demonstrate solutions for problems, answer
questions about material presented in the lectures or book, and focus on
preparing students for exams. Students should be prepared to devote 3-4 hours
per week outside class meetings, primarily working on problem sets as well as
reading and reviewing the text, additional reading assignments, and class notes.
Course Objectives: Each student should be able by the end of the semester
to:
• Recognize and use the mathematical terminology and notation typically employed
by economists
• Explain how specific mathematical functions can be used to provide formal
methods of describing the linkages between key economic variables
• Employ the mathematical techniques covered in the course to solve economic
problems and/or predict economic behavior
• Explain how mathematical concepts enable economists to analyze complicated
problems and generate testable hypotheses
Wouldn't life be simple if, in making decisions, we could
ignore the interests and actions of others? Simple yes--but boring too. The fact
remains that most real-world decisions are not made in isolation, but involve
interaction with others. This course studies the competitive and cooperative behavior that
results when several parties with conflicting interests must work together. We will learn
how to use game theory to formally study situations of potential conflict: situations
where the eventual outcome depends not just on your decision and chance, but the actions
of others as well. Applications are drawn from economics, business, and political science.
Typically there will be no clear cut "answers" to these problems (unlike most
single-person decisions). Our analysis can only suggest what issues are important and
provide guidelines for appropriate behavior in certain situations.
Economists increasingly are asked to design markets in
restructured industries to promote desirable outcomes. This
course studies the new field of market design. The ideas from game theory and
microeconomics are applied to the design of effective market rules. Examples
include electricity markets, spectrum auctions, environmental auctions, and
auctions of takeoff and landing slots at congested airports. The emphasis is
both on the design of high-stake auction markets and bidding behavior in these
markets.
Economics 603
is the first half of the Economics Department’s two-semester core sequence in
Microeconomics. This course is taken by all first-year Economics Ph.D. students,
as well as by quite a few Ph.D. students in Agricultural & Resource Economics,
the Smith School of Business, and other academic departments. The first half of
the semester treats consumer theory and the theory of the firm. The second half
of the semester is an introduction to game theory and its applications in
economics.
Presents a formal
treatment of game theory. We begin with extensive-form games. A game tree is defined, as
well as information sets and pure, mixed and behavioral strategies. Existence of Nash
equilibria is discussed. We then turn to the analysis of dynamic games, covering repeated
games, finitely repeated games, the folk theorem for repeated games, subgame perfection,
and punishment strategies. Next, games with incomplete information are studied, including
direct revelation games, concepts of efficiency, and information transmission. Several
refinements of Nash equilibria are defined, such as sequential equilibria, stable
equilibria, and divine equilibria. The analysis of enduring relationships and reputations
is covered. The course concludes with a discussion of two important applications of game
theory: auctions and bargaining. The topics include sealed-bid auctions, open auctions,
private valuation and common valuation models, the winner's curse, auction design,
bargaining with incomplete information, double auctions and oral double auctions.