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Department of Economics
32L.4.02; x7525
EC487
2014/15
Reading List
EC487 Advanced Microeconomics
Part 2: Lent Term
The course is based on 10 2-hours lectures and 10 1-hour classes. The course
evaluation is based on a 3 hours exam in the Summer term. All lectures, problem
sets and solutions will be available at http://econ.lse.ac.uk/staff/lfelli/teaching.html.
Main textbooks:
Andreu Mas-Colell, Michael Whinston and Jerry Green, Microeconomic
Theory, Oxford: Oxford University Press, 1995. (MWG hereafter).
Martin J. Osborne and Ariel Rubinstein, A Course in Game Theory, Cambridge: M.I.T. Press, 1994.
Reference books:
Drew Fudenberg and Jean Tirole, Games Theory, Cambridge: M.I.T. Press,
1991. (FT hereafter).
Course Outline
1. Game Theory: Static Games of Complete Information (MWG: Ch. 8 (8.A8.D), Ch. 12 (12.A-12.C); FT: Ch. 1)
Kreps, D. M. (1987): Nash Equilibria, in The New Palgrave Dictionary of
Economics, J. Eatwell, M. Milgate, and P. Newman (Eds.), Palgrave Macmillan.
Dasgupta, P. and E. Maskin (1986): The Existence of Equilibrium in Discontinuous Economic Games, 1: Theory, Review of Economic Studies, 53,
1-26.
2. Games with simple dynamic Structure and Subgame Perfection (MWG: Ch.
7, Ch. 9 (9.A-9.B); FT: Ch. 3)
Selten, R. (1975): A Re-examination of the Perfectness Concept for Equilibrium Points in Extensive Games, International Journal of Game Theory, 4,
2555.
3. Bargaining games (MWG: Ch. 9 (Appendix A); FT: Ch. 4 (4.4, 4.6)).
Rubinstein, A. (1982): Perfect Equilibrium in a Bargaining Model, Econometrica, 50, 97110.
Shaked, A. and J. Sutton (1984): Involuntary Unemployment as a Perfect
Equilibrium in a Bargaining Model, Econometrica, 52, 135164.
Sutton, J. (1986): Non-Cooperative Bargaining Theory: an Introduction, Review of Economic Studies, 53, 70924.
Anderlini, L. and L. Felli (2001): Costly Bargaining and Renegotiation, Econometrica, 69, 377-411.
4. Repeated Games and Applications: Cartels (MWG: Ch. 12 (12.D-12.F, Appendix A): FT: Ch. 5).
Fudenberg, D. and E. Maskin (1986): The Folk Theorem in Repeated Games
with Discounting and Incomplete Information, Econometrica, 54, 53354.
Porter, R. (1983): Optimal Cartel Trigger Price Strategies, Journal of Economic Theory, 29, 31338.
Rogerson, W. (1985): The First-Order Approach to Principal-Agent Problems, Econometrica, 53, 1357-68.