AØKA08005U Microeconomics III (former Micro C)

Volume 2015/2016
Education

Prioritized elective at the 3.year of BSc in Economics
Compulsory at MSc in Economics - if not taken at the BSc

Content

This course furthers the introduction of game theory, non-cooperative as well as cooperative, and its applications in economic models. The student who successfully completes the course will learn the basics of game theory and will be enabled to work further with advanced game theory. The student will also learn how economic problems involving strategic situations can be modeled using game theory, as well as how these models are solved. The course intention is that the student becomes able to work with modern economic theory, for instance within the areas of industrial organization, macroeconomics, international economics, labor economics, public economics, political economics and financial economics.

In the process of the course the student will learn about

    Static games with complete information,

    Static games with incomplete information,

    Dynamic games with complete information,

    Dynamic games with incomplete information,

    Basic cooperative game theory.

The first part of the course is devoted to static games with complete information. This part of the course extends the initial treatment of the subject from Microeconomics B (Mikroøkonomi B). The concept of a normal form game and solution concepts such as dominance and Nash Equilibrium are reintroduced in a formally rigorous way. Students will also study a variety of economic applications of the theory. Finally, they will look more deeply into the theory of static games with complete information by studying mixed strategies and mixed-strategy Nash equilibria, and discussing equilibrium existence.

 The second part of the course extends the treatment of dynamic games with complete information. The students will learn this theory in a more rigorous way and discuss various economic applications. The students will then study games with imperfect information and repeated games. They will be introduced to extensive form games, and will learn about the relevant refinement of the Nash equilibrium concept: subgame-perfect Nash equilibrium. Again, the theory will be illustrated by economic applications.

 In the third part of the course the students will study simultaneous games of incomplete information. They will learn about the concept of Bayesian Nash equilibrium and apply their knowledge to different kinds of auctions, mechanism design problems, and other applications.

 The fourth part of the course is devoted to dynamic games of incomplete information. The students will analyze the implications of introducing sequential moves into the games with incomplete information. They will gain knowledge of the Perfect Bayesian Equilibrium and its refinements, and will apply the theory to signaling games and other relevant economic problems. In particular, they will look into the job-market signaling model of Spence and other asymmetric information models.

Finally, the course will address cooperative games. The students will learn the basics of bargaining theory and cooperative game theory.

Learning Outcome

To obtain a top mark in the course students must prove their ability to set up, prove, analyze and apply the theories and methods used in the course in an excellent manner. More specifically, the students should know the theory and be able to work with both normal and extensive form games. They should know, understand and be able to apply the concepts of dominant strategies, iterative elimination of dominant strategies, as well as mixed strategies.

The students should know the central equilibrium concepts in non-cooperative game theory, such as Nash equilibrium, subgame-perfect Nash equilibrium, Bayesian Nash equilibrium, and perfect Bayesian equilibrium. They should understand why these concepts are central, when they are used, and how they are related. They should be able to apply the relevant equilibrium and solution concepts. Furthermore, the students should acquire knowledge about a number of special games and particular issues associated with them, such as repeated games (including infinitely repeated games), auctions and signaling games. The students should also understand and be able to apply the solution concepts of cooperative game theory, such as the core. Furthermore, the students should also learn the basics of bargaining theory. To obtain a top mark in the course the student must be able to excel in all of the areas listed above.

Syllabus:

1. Robert Gibbons. A Primer in Game Theory. Prentice Hall 1992.

Parts of:

2. Martin J. Osborne: An introduction to Game Theory, Oxford University Press, 20043.

3. Some short additional materials (can be downloaded from the course page)

The course requires knowledge equivalent to that achieved in Microeconomics I (Microeconomics A) and Microeconomics II (Microeconomics B).
The teaching will consist of lectures, as well as exercise classes. While the lectures will discuss and put perspectives on the curriculum, the exercise classes will focus on exercises and applications of the theory. Some relevant experiments will be discussed.

Schedule:
2 hours of lecturing and 2 hours of excercises 1-2 times a week for 14 weeks

Timetable and classroom:
For time and classroom please press the link under "Se skema"(See schedule) at the right side of this page (15E means Autumn 2015, 16F means Spring 2016).

You can find the similar information partly in English at
https:/​/​skema.ku.dk/​ku1516/​uk/​module.htm
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-F16;Microeconomics III”
-Select Period: “Forår/Spring – Weeks 4-29”
-Press: “ View Timetable”

Normally the exercise classes begin in the second week of the semester.

Please be aware:
- That all exercise classes will be taught in English from F16.
- If too many students have wished a specific class students will be registered at another class. It is not possible to change class after the registration period has expired, and after the Study Administration has allocated the students to a class unless the registration clashes with another course registration.
- It is not allowed to participate in a exercise class a student is not registered.
- If not enough registered students or available teachers the classes may be jointed so class 1 and 2 become one, 3 and 4 become one and 5 and 6 become one.
- That the schedule of the exercise classes can be changed until just before the teaching begins without the participants accept. If this happens the participants will be informed or can see it at the above link. After enrollment it can be seen in KUnet and by the app myUCPH.
  • Category
  • Hours
  • Class Exercises
  • 42
  • Exam
  • 2
  • Lectures
  • 42
  • Preparation
  • 120
  • Total
  • 206
Credit
7,5 ECTS
Type of assessment
Written examination, 2 hours under invigilation
The exam is a 2 hours exam without any aids at the computers of Copenhagen University.
Exam registration requirements

As a part of the course, three written assignments should be completed and accepted.

Aid
Without aids
Marking scale
7-point grading scale
Censorship form
External censorship
100% censorship
Exam period

Autumn 2015: The exam takes place 21 December 2015 at Peter Bangs Vej 36. 2000 Frederiksberg http:/​/​pc-eksamen.ku.dk/​pc_exam

Spring 2016: The exam takes place June 15, 2016 at Peter Bangs Vej 36. 2000 Frederiksberg http:/​/​pc-eksamen.ku.dk/​pc_exam

The exact time of the exam will be informed in the Self-Service at KUnet mid-April.

For enrolled students more information about examination, exam/re-sit, rules etc. is available at the student intranet for Examination (English),student intranet for Examination (KA-Danish) and student intranet for Examination (BA-Danish).

Re-exam

Autumn 2015: Same as the ordinary exam.

Spring 2016: The exam takes place August 18, 2016 at Peter Bangs Vej

The exact time of the exam will be informed in the Self-Service at KUnet mid-July.

If only a few students have registered for the re-exam, the exam might change to an oral exam including the date for the exam, which will be informed  by the Examination Office.

Criteria for exam assesment

The student must in a satisfactory way demonstrate that he/she has mastered the learning outcome of the course.