14.04
Intermediate Microeconomic Theory
Analysis of consumer and producer decisions including analysis of competitive and monopolistic markets. Price-based partial and general equilibrium analysis. Introduction to game theory as a foundation for the strategic analysis of economic situations. Imperfect competition, dynamic games among firms. Failures of general equilibrium theory and their resolutions: externalities, public goods, incomplete information settings, signaling, screening, insurance, alternative market mechanisms, auctions, design of markets.
Fall 2020 · Intermediate Microeconomic Theory
Topics
- Introduction
- Preferences
- Preferences and Utility Maximization
- Income and Substitution Effects
- Production and Profit Maximization
- Uncertainty
- Dynamic Optimization
- Pareto Optimality
- Q & A
- Risk-Sharing Application I
- Village India / Portfolio Choice
- Risk-Sharing Application II
- Financial Modeling
- Mechanism Design
- Contracts and Mechanism Design I
- Moral Hazard
- Contracts and Mechanism Design II
- Walrasian Equilibrium and International Trade
- 2x2x2 model
- Trade Application I
- Trade Application II
- Welfare Theorems
- Existence of Equilibria
- Existence
- Gorman Aggregation
- Identification
- Aggregation & Failure of Welfare Theorems
- Failure of Welfare Theorems
- Monetary Theory
Readings
- [Kreps] Kreps, David M. 1990. A Course in Microeconomic Theory . Princeton: Princeton University Press. ISBN: 9780691042640.
- [Medville] Townsend, Robert M. 1993. The Medieval Village Economy: A Study of the Pareto Mapping in General Equilibrium Models . Princeton: Princeton University Press. ISBN: 9780691042701.
- [MWG] Mas-Colell, A., Whinston, M. D., & Green, J. R. (1995). Microeconomic Theory. Oxford University Press. ISBN: 9780195073409.
- [NS] Nicholson, W., and C.M. Snyder. 2016. Microeconomic Theory: Basic Principles and Extensions . Boston: Cengage Learning. ISBN: 9781305505797.
- [Varian] Varian, Hal. 1992. Microeconomic Analysis . Third Edition. New York: Norton. ISBN: 9780393957358.
- [*Medville] Chapter 1 “Introduction”
- Matzkin, Rosa L., 2007. “Nonparametric Identification.” In: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics , edition 1, volume 6, chapter 73 Elsevier. ISBN: 9780444506313.
- Frisch, Ragnar. (1926) “On a Problem in Pure Economics: Translated by JS Chipman.” Preferences, Utility, and Demand: A Minnesota Symposium. 1926."
- Denison, Erin, Michael Lee, and Antoine Martin. 2016. “What do cryptocurrencies do?” Federal Reserve Bank of New York Paper.
- Autor, DH, Dorn D, Hanson GH. 2013. “The China Syndrome: Local Labor Market Effects of Import Competition in the United States.” Am. Econ. Rev . 103(6):2121–68
- Malinowski, Bronisław. Argonauts of the Western Pacific: An Account of Native Enterprise and Adventure in the Archipelagoes of Melanesian New Guinea . London: Routledge and Kegan Paul. ISBN: 9780415090940.
- Ralph L. Beals. 1975. Peasant Marketing System of Oaxaca, Mexico . ISBN: 9780520363137.
- *[NS] Chapter 3 “Preferences and Utility; Chapter 4 “Utility Maximization”
- *[NS Chapter 5] “Income and Substitution Effects”
- *[NS] Chapter 8 “Expected Utility and Risk Aversion”
- *[Medville] Chapter 3 “Storage as Risk Reduction”
- Topics covered: Village India with ex post consumption and income data, ex ante Land Division in the Medieval Village Economy
- *[Medville], Chapter 2 “Uncertainty and Land-Holding Patterns”
- *Alvarez, Fernando, Anan Pawasutipaisit, and Robert M. Townsend. 2018. “Cash Management in Village Thailand: Positive and Normative Implications.” Working Paper.
- * Samphantharak, K. and Townsend, R.M., 2009. Households as corporate firms: an analysis of household finance using integrated household surveys and corporate financial accounting. Econometric Society Monographs (Book 46). Cambridge University Press, Chs 2, 4.
- *[Medville] Chapter 5 “Rentals with Unobserved Outputs”
- *Karaivanov, Alexander. 2001. “Computing Moral Hazard Programs with Lotteries Using Matlab.” Mimeo.
- Jehle, Geoffrey A. and Philip J. Reny. 2011. Advanced Microeconomic Theory . Third Edition. New York: Financial Times/Prentice Hall. ISBN: 9780273731917. Chs. 7.1-7.2.2 “Strategic Decision Making”, “Dominant Strategies”, “Nash Equilibrium”.
- *Acemoglu, Daron. Introduction to Modern Economic Growth . Princeton: Princeton University Press. ISBN: 9780691132921. Chapter 5.2. “The Representative Household”, 218-226.
- *Townsend, Robert M. 1980. “Models of Money with Spatially Separated Agents.” In Models of Monetary Economies , edited by John Kareken and Neil Wallace. Minneapolis: Federal Reserve Bank of Minneapolis, pp. 265-303
- Townsend, Robert and Neil Wallace. 1987. “Circulating Private Debt: An Example with a Coordination Problem.” In Contractual Arrangements for Intertemporal Trade , edited by Edward C. Prescott and Neil Wallace. Minneapolis: University of Minnesota Press, pp 105-20. ISBN: 9780816615346.
Prerequisites & course information
Prereq: Calculus II (GIR) and 14.01 U (Fall) 4-0-8 units. HASS-S
Sources
- Course catalogue ↗2026–2027
- MIT OpenCourseWare ↗Fall 2020
- MIT OCW readings ↗
- MIT OCW syllabus ↗
- MIT OCW calendar ↗
- Historical MIT OpenCourseWare offering. Named reading entries and schedule topics are automatically extracted from the linked source pages.