ECON 370 Fall 2006

Instructor Mehmet Barlo
   
Office / Phone 1024 FASS; (90) 216 483 9284
Email: barlo at sabanciuniv.edu
Class: Th 14:40 - 17:30 FASS 1103
Syllabus: Please click HERE (in pdf format)
   
Course Objectives:
The goal of this course is to introduce students to, and obtain their acquaintance with the formal methods of microeconomics theory. This is a fundamental course in which you ought to learn to understand microeconomics and its related fields. We shall derive most of the results from primitives and associate these results with practical applications.
Background:
You are expected to be familiar and fluent with introductory calculus and ECON 201 and 204. In this course we shall be reading and writing the proofs of selected theorems; this is often a useful exercise for understanding a theorem's content and intuition.
Texts:

We will not follow a particular book word for word, yet, the below listed books do cover the same material with lots of examples. None is required, but each book will be available in the reserve of the IC. Further sources will be announced in lectures.

1. Intermediate Microeconomics: A Modern Approach, Hal Varian; this is maybe the most commonly used microeconomics text book in the world. It is a very good book that you want to keep for your own library. The level of it regarding this course is almost suitable, but sometimes it is not as formal as the desired.

2. A Course in Microeconomic Theory, David M. Kreps; this is an advanced undergraduate/graduate textbook, good in particular for uncertainty and information economics.

3. Advanced Microeconomic Theory, G. A. Jehle and P. J. Reny; this is one of the most popular (and new) graduate microeconomics textbooks, it is formal and is intended for the first year in graduate economics studies. It requires more technical knowledge than our course, but going over it with the knowledge you have acquired in this course may help you a lot in getting a clear vision for the subjects at hand. You might want to buy it for your own library.
Grading:

Homeworks: (%10 of grade)


Quizzes: (%10 of grade) There will be a short quiz (almost) every week.


Midterms: There will be two midterms in class. The first will be shorter (%15 of grade) and the second one longer (%25 of grade).


Final: (%40 of grade) The final will be comprehensive.
   
Program:
 

Individual choice, and derivation of preferences and utility functions;

The Theory of Demand, the properties of demand functions;

Aggregation of demand;

Pure Exchange Economies: The Competitive (general or Walrasian) equilibrium and The Core:

Introduction to the Walrasian equilibrium, and its formal definition; Introduction to welfare concepts: Pareto optimality, individual rationality and the core; Existence of competitive equilibria: The Walrasian auctioneer
interpretation; Important Properties: Two fundamental theorems of welfare
economics, and their policy implications; Debreu--Scarf limit result to render an equivalent interpretation for the Walrasian equilibrium; The use of Walrasian equilibrium in modern macroeconomics.


Topics from cooperative game theory: Networks and Matchings.

Choice under uncertainty:

von Neumann--Morgenstern Expected Utility Theorem; Monetary lotteries: Attitudes towards risk, and lots of examples - portfolio construction, insurance, ...

Economics of information:

Hidden action (moral hazard) and hidden information (adverse selection) models; mixed models; Auctions; Introduction to mechanism design: The Revelation Principle; Examples in the theory of industrial organization and labor economics.