We will examine problems in which optimising consumers or firms interact strategically and non-cooperatively, where information might be private, where some actions might not be observed, or where agents have to search for the best price or a job.
Course outline :
(1) Revision of the theory of the consumer and the firm : Constrained optimisation and the Lagrangean, value functions, duality, Slutsky decomposition.
(2) Strategic Interactions : Monopoly, Oligopoly, Cournot and Bertrand competition.
(3) Introduction to the economics of information : Hidden information (asymmetric information), hidden action (moral hazard).
(4) Decentralised markets : Introduction to Search Theory. Application to models of the labour market.
(5) Introduction to Game Theory : Normal form games, extensive form games, equilibrium notions.