1

Tues, 3/25

Models of oligopoly I: The basic Cournot and Bertrand models, with and without entry.

Reading: MWG 12C &12E.

Lecture notes for Lecture 1.

2

Thurs, 3/27

Models of oligopoly II: The Stackelberg model. The value of precommitment.

Reading: The material for the second part of this lecture is based on van Damme, E. and S. Hurkens (1997), "Games with Imperfectly Observable Commitment", Games and Economic Behavior 21, 282-308 (ScienceDirect Link).

Lecture notes for Lecture 2.

Problem Set 1 (due 4/4)

Sketch of solution to Problem Set 1

3

Tues, 4/1

Models of markets with incomplete information I: Adverse Selection.

Reading: MWG 13B.

The following excellent survey contains an insightful discussion of all models in this section as well as recent research and applications: Riley, J. (2001), "Silver Signals: Twenty-Five Years of Screening and Signaling", Journal of Economic Literature 39, 432-478 (JSTOR link).

Lecture notes for Lecture 3.

4

Thurs, 4/3

Models of markets with asymmetric information II: Signaling.

Reading: MWG 13C and Appendix A.

Lecture notes for Lecture 4.

Problem Set 2 (due 4/11)

Sketch of solution to Problem Set 2

5

Tues, 4/8

Models of markets with asymmetric information III: Signaling, Screening.

Reading: MWG 13D.

6

Thurs, 4/10

Models of markets with asymmetric information III: Screening.

Reading: MWG 13D.

Lecture notes for Lecture 6.

Problem Set 3 (due 4/18)

Sketch of solution to Problem Set 3

7

Tues, 4/15

Models of monopolistic contracting with asymmetric information I: Hidden actions - the discrete case.

Reading: MWG 14B.

The best introduction is still Holmstrom's seminal paper on Moral Hazard: B. Holmstrom (1979), "Moral Hazard and Observability", Bell Journal of Economics 10, 74-91 (JSTOR link).

Lecture notes for Lecture 7.

8

Thurs, 4/17

Models of monopolistic contracting with asymmetric information II: Hidden actions - the continuous case and examples.

Reading: MWG 14B.

Lecture notes for Lecture 8.

Problem Set 4 (due 4/25)

Sketch of solution to Problem Set 4

9

Tues, 4/22

Models of monopolistic contracting with asymmetric information III: Hidden knowledge - the discrete case.

Reading: MWG 14C.

Lecture notes for Lecture 9.

10

Thurs, 4/24

Models of monopolistic contracting with asymmetric information IV: Hidden knowledge - the continuous case.

A very clear and systematic treatment of the technical aspects of this model can be found in Guesnerie, R. and J.-J. Laffont (1984), "A complete solution to a class of Principal-Agent problems with an application to the control of a self-managed firm", Journal of Public Economics 25, 329-369 (ScienceDirect Link).

Reading: MWG 14C-D.

Lecture notes for Lecture 10.

Problem Set 5 (due 5/2)

Sketch of solution to Problem Set 5

11

Tues, 4/29

Applications: Indivisible good problems I - static models. First- and second price auctions.

Reading: Still a very good introduction to auction theory is  R. P. McAfee and J. McMillan (1987), "Auctions and Bidding",  Journal of Economic Literature  25,  699-738 (JSTOR link).

Lecture notes for Lecture 11.

12

Thurs, 5/01

Applications: Indivisible good problems II - dynamic models. The Coase conjecture.

Reading:

Lecture notes for Lecture 12.

Problem Set 6 (due 5/9)

Sketch of solution to Problem Set 6

13

Tues, 5/06

Mechanism Design I: Dominant strategy implementation.

Reading: MWG 23B-C.

Both of the following surveys give an excellent overview and discussion of the classic results in mechanism design. The former concentrates on complete information environments and also contains a nice informal introduction to the implementation problem (Part I); the latter focuses on Bayesian implementation and gives a good short overview over the mechanism design literature in the introduction: Moore, J. (1992), "Implementation, contracts, and renegotiation in environments with complete information" and Palfrey, T. (1992): "Implementation in Bayesian equilibrium: the multiple equilibrium problem in mechanism design"; both in: Laffont, J.-J. (ed.), Advances in economic theory: Sixth World Congress, Cambridge University Press.

Lecture notes for Lecture 13.

14

Thurs, 5/08

Mechanism Design II: Bayesian implementation. An application of optimal Bayesian mechanisms: Optimal auctions.

Reading: MWG 23D-F.

Lecture notes for Lecture 14