Outline of the Course

SPECIAL TOPICS ON MICROECONOMICS

I. Choice under Uncertainty

I.1 Expected Utility Theory

I.1.1 Description of Risky Alternatives

I.1.2 Preferences over Lotteries

I.1.3 The Expected Utility Theorem

I.2 Money Lotteries and Risk Aversion

I.2.1 Risk aversion

I.2.2 Arrow-Pratt Measures of Risk Aversion

I.2.3 Ross’ Stronger Measures of Risk Aversion

I.3 Comparison of Payoff Distributions

I.3.1 Stochastic Dominance

I.3.2 Ranking Transformations of Random Variables

I.4 Comparative Statics of Risk

I.5 Multiple Risks

I.5.1 Extensions of the Arrow-Pratt Results on Risk Aversion

I.5.2 Prudence and its Measurement

I.5.3 Standard Risk Aversion

II. Noncooperative Game Theory

II.1 Static Games of Complete Information

II.1.1 Normal-form Representation of Games

II.1.2 Dominant and Dominated Strategies

II.1.3 Nash Equilibrium

II.1.4 Mixed Strategies and Existence of Equilibrium

II.2 Dynamic Games of Complete Information

II.2.1 Extensive-form Representation of Games

II.2.1 Dynamic Games of Complete and Perfect Information

─ Backwards Induction

II.2.2 Dynamic Games of Complete but Imperfect Information

─ Subgame-Perfect Nash Equilibrium

II.2.3 Repeated games

II.3 Static Games of Incomplete Information (Static Bayesian Games)

II.3.1 Normal-form Representation of Static Bayesian Games

II.3.2 Definition of Bayesian Nash Equilibrium

II.4 Dynamic Games of Incomplete Information

II.4.1 Introduction to Perfect Bayesian Equilibrium

II.4.2 Signaling Games

II.4.3 Cheap-Talk Games

II.4.4 Sequential Bargaining under Asymmetric Information

II.4.5 Reputation in the Finitely Repeated Prisoners’ Dilemma

REFERENCE

I. Choice under Uncertainty

*Mas-Colell, A., M.D. Winston and J.P. Green, Microeconomic Theory, Oxford University Press, 1995, Ch. 6. (華泰書局代理)

*Varian, H.R., Microeconomic Analysis, 3^rd ed. New York: Norton, 1992, Ch. 11.

Aboudi, R. and D. Thon (1995) “Second-Degree Stochastic Dominance Decisions and Random Initial Wealth with Applications to the Economics of Insurance,” Journal of Risk and Insurance, 30-49.

*Applebaum, E. and E. Katz (1986) “Measures of Risk Aversion and Comparative Statics of Industry Equilibrium,” American Economic Review, 524-29.

*Batra, R.N. and A. Ullah (1974) “Competitive Firm and the Theory of Input Demand under Price Uncertainty,” Journal of Political Economy, 537-48.

*Blair, R.D. (1974) “Random Input Prices and the Theory of the Firm,” Economic Inquiry, 214-25.

Bültel, D. (1999) “Increases in Risk Aversion,” International Economic Review, 63-67.

Diamond, P.A. and J.E. Stiglitz (1974) “Increases in Risk and in Risk Aversion,” Journal of Economic Theory, 337-360.

Eeckhoudt, L. and M.S. Kimball (1992) “Background Risk, Prudence and Insurance Demand,” in Contributions to Insurance Economics, ed. By G. Dionne. Boston/ Dordrecht/London: Kluwer, 239-54.

Hadar, J. and R. Russel (1971) “Stochastic Dominance and Divergence,” Journal of Economic Theory, 288-305.

Hadar, J. and T.K Seo (1990a) “Ross’ Measure of Risk Aversion and Portfolio Selection,”Journal of Risk and Uncertainty, 93-99.

Hadar, J. and T.K Seo (1990b) “The Effects of Shifts in a Return Distribution on Optimal Portfolios,” International Economic Review, 721-36.

*Kihlstrom, R.R., D. Romer and S. Williams (1981) “Risk Aversion with Random Initial Wealth,” Econometrica, 911-20.

*Kimball, M.S. (1990) “Precautionary Saving in the Small and in the Large,” Econometrica, 53-73.

*______ (1993) “Standard Risk Aversion,” Econometrica, 589-611.

Machnes, Y. (1993) “Further Results on Comparative Statics under Uncertainty,”European Journal of Political Economy, 141-46.

Ormiston, M.B. (1992) “First and Second Degree Transformations and Comparative Statics under Uncertainty,” International Economic Review, 33-44.

*Pope, R.D. and A.K. Kramer (1979) “Production Uncertainty and Factor Demands for the Competitive Firm,” Southern Economic Journal, 489-501.

Pratt, J.W. (1964) “Risk Aversion in the Small and in the Large,” Econometrica, 122-36.

*______ (1988) “Aversion to one Risk in the Presence of Others,” Journal of Risk and Uncertainty, 395-413.

*______ and R.J. Zeckhauser (1987) “Proper Risk Aversion,” Econometrica, 143-54.

*Ross, S.A. (1981) “Some Stronger Measures of Risk Aversion in the Small and in the Large with Applications,” Econometrica, 621-38.

Rothschild, M. and J.E. Stiglitz (1970) “Increasing Risk, I: A Definition,” Journal of Economic Theory, 225-43.

______ (1971) “Increasing Risk, II: Its Economic Consequences,” Journal of Economic Theory, 66-84.

*Sandmo, A. (1971) “On the Theory of the Competitive Firm under Price Uncertainty,”American Economic Review, 65-73.

Viaene, J-M. and I. Zilcha (1998) “The Behavior of Competitive Exporting Firms under Multiple Uncertainty,” International Economic Review, 591-609.

Wong, K.P. (1995) “Further Results on Comparative Statics under Uncertainty: A Comment on Machnes,” European Journal of Political Economy, 761-68.

______ (1996) “Background Risk and the Theory of the Competitive Firm under Uncertainty,” Bulletin of Economic Research, 241-51.

Yarri, M. (1969) “Some Remarks on Measures of Risk Aversion and Their Uses,” Journal of Economic Theory, 315-29.

II. Noncooperative Game Theory

*Gibbons, R. A Primer in Game Theory, 1992, 新陸書局代理.

Mas-Colell, A., M.D. Winston and J.P. Green, Microeconomic Theory, Oxford University Press, 1995, Chs. 7-9.

Fudenberg, D. and J. Tirole, Game Theory, MIT Press, 1991.

Abreu, D. (1988) “On the Theory of Infinitely Repeated Games with Discounting,”Econometrica, 383-96.

Bagwell, K. (1995) “Commitment and Observability in Games,” Games and Economic Behavior, 271-80.

Baron, D. and R. Myerson (1982) “Regulating a Monopolist with Unknown Costs,”Econometrica, 911-30.

Barro, R. (1986) “Reputation in a Model of Monetary Policy with Incomplete Information,” Journal of Monetary Economics, 3-20.

Cramton, P. (1998) “Ascending Auctions,” European Economic Review, 745-56.

Crawford, V. and J. Sobel (1982) “Strategic Information Transmission,” Econometrica, 1431-51.

Dasgupta, P. and E. Maskin (1986) “The Existence of Equilibrium in Discontinuous Economic Games, I: Theory,” Review of Economic Studies, 1-26.

Diamond, D. and P. Dybvig (1983) “Bank Runs, Deposit Insurance, and Liquidity,”Journal of Political Economy, 401-19.

Dudey, M. (1992) “Dynamic Edgeworth-Bertrand Competition,” Quarterly Journal of Economics, 1461-77.

Engelbrecht-Wiggansl, R. (1993) “Optimal Auctions Revisited,” Games and Economic Behavior, 227-39.

Espinosa, M. and C. Rhee (1989) “Efficient Wage Bargaining as a Repeated Game,”Quarterly Journal of Economics, 565-88.

Farber, H. (1980) “An Analysis of Final-Offer Arbitration,” Journal of Conflict Resolution, 683-705.

Farrell, J. (1987) “Cheap Talk, Coordination, and Entry,” Rand Journal of Economics, 34-39.

Fershtman, C. and K.L. Judd (1987) “Equilibrium Incentives in Oligopoly,” American Economic Review, 927-40.

Friedman, J. (1971) “A Noncooperative Equilibrium for Supergames,” Review of Economic Studies, 1-12.

Fudenberg, D. and E. Maskin (1986) “The Folk Theorem in Repeated Games with Discounting and Incomplete Information,” Econometrica, 533-54.

Fudenberg, D. and J. Tirole (1991) “Perfect Bayesian Equilibrium and Sequential Equilibrium,” Journal of Economic Theory, 236-60.

Gibbons, R. (1988) “Learning in Equilibrium Models of Arbitration,” American Economic Review, 896-912.

Green, E. and R. Porter (1984) “Noncooperative Collusion Under Imperfect Price Information,” Econometrica, 87-100.

Harsanyi, J. (1967) “Games with Incomplete Information Played by Bayesian Players, Parts I, II, and III,” Management Science, 159-82, 320-34, 486-502.

Harsanyi, J. (1973) “Games with Randomly Distributed Payoffs: A New Rationale for Mixed Strategy Equilibrium Points,” International Journal of Game Theory, 1-23.

Harstad, R.M. and D. Levin (1985) “A Class of Dominance Solvable Common-Value Auctions,” Review of Economic Studies, 525-28.

Hart, O. (1983) “Optimal Labor Contracts under Asymmetric Information,” Review of Economic Studies, 3-35.

Kreps, D., P. Milgrom, J. Roberts, and R. Wilson (1982) “Rational Cooperation in the Finitely Repeated Prisoners’ Dilemma,” Journal of Economic Theory, 245-52.

Kreps, D. and J. Scheinkman (1983) “Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes,” Bell Journal of Economics, 326-37.

Lazear, E. and S. Rosen (1981) “Rank-Order Tournaments as Optimum Labor Contracts,”Journal of Political Economy, 841-64.

Laffont, J.-J. (1997) “Game Theory and Empirical Economics: The Case of Auction Data,” European Economic Review, 1-36.

Laffont, J.-J. and D. Martimort (1997) “Collusion under Asymmetric Information,”Econometrica, 875-911.

McAfee, P. and J. McMillan (1987) “Auctions and Bidding,” Journal of Economic Literature, 699-738.

Milde, H. and J. Riley (1998) “Signaling in Credit Markets,” Quarterly Journal of Economics, 101-30.

Milgrom, P. (1989) “Auctions and Bidding; A Primer,” Journal of Economic Perspectives, 3-22.

Milgrom, P. and J. Roberts (1982) “Limit Pricing and Entry under Incomplete Information: An Equilibrium Analysis,” Econometrica, 443-59.

Myerson, R. (1979) “Incentive Compatibility and the Bargaining Problem,” Econometrica, 61-73.

Myerson, R. (1985) “Bayesian Equilibrium and Incentive Compatibility: An Introduction,” In Social Goals and Social Organization. L. Hurwictz, D. Schmeidler, and H. Sonnenschein, eds. Cambridge:Cambridge University Press..

Rosen, S. (1986) “Prizes and Incentives in Elimination Tournaments,” American Economic Review, 701-15.

Rubinstein, A. (1982) “Perfect Equilibrium in a Bargaining Model,” Econometrica, 97-109.

Shaked, A. and J. Sutton (1984) “Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model,” Econometrica, 351-64.

Shapiro, C. and J. Stiglitz (1984) “Equilibrium Unemployment as a Discipline Device,”American Economic Review, 433-44.

Sobel, J. and I. Takahashi (1983) “A Multistage Model of Bargaining,” Review of Economic Studies, 411-26.

Spence, A.M. (1973) “Job Market Signaling,” Quarterly Journal of Economicss, 355-74.

Stein, J. (1989) “Cheap Talk and the Fed: A Theory of Imprecise Policy Announcements,”American Economic Review, 32-42.

Wolfstetter, E., Topics in Microeconomics. Cambridge University Press, 1999, Ch. 8.