28874 - Microeconomics 2

Learning outcomes

At the end of the class, the student has a working knowledge of the basic tools and results of the following topics:
- classical microeconomic theory for perfectly competitive environments
- market failures 

Course contents

1.  Consumer choice 
2.  Choice under uncertainty
3.  The Fundamental Theorems of Welfare Economics and their implications. 
4.  Public goods.
5.  Externalities.
6. Markets under adverse selection (the market for lemons). Signaling, and screening.
7. The theory of optimal risk-sharing. The principal-agent problem. Contracts under moral hazard.
8. Contracts under adverse selection.

Readings/Bibliography

- Consumer choice, choice under uncertainty, production, pure exchange economies, Mas-Colell, Whinston and Green, Microeconomic Theory, Oxford University Press, 1995, selected parts from Chapters 2, 3, 5, 6,10.

- Externalities and public goods: Varian, H., Microeconomic Analysis, III ed., Norton, 1992, chaps 23 and 24.

- The market for lemons, signaling and screening: A.Mas-Colell, M.Whinston and J. Green, Microeconomic Theory, Oxford University Press, 1995, chap 13. 

- Optimal risk-sharing and moral hazard: Milgrom-Roberts, Economics Organization and Management, McGraw Hill, 1992, chaps.5 and 7.

- The Revelation Principle: Laffont, J.J. and D. Martimort, The Theory of Incentives: The Principal-Agent Model, Princeton University Press, 2001, chap 2.

- Adverse selection and moral-hazard in contracts theory: Bolton P. and M. Dewatripont, Contract Theory, The MIT Press, 2005, chaps 2 (sections 2.1 and 2.3.3) and 4 (sections 4.1 and 4.2).

Teaching methods

Class lectures with slides.

Assessment methods

During the course, students will be required to solve two problem-sets.

The exam aims at verifying whether the students reached the course objectives; that is whether they obtained a working knowledge of the basic tools and results of the classical microeconomic theory for perfectly competitive environments and of market failures

The final grade of Microeconomics 2 depends on the two problem-sets evaluation and on the result of a written exam. The latter contains two open questions on the main topics of the course.

Teaching tools

Students have access to a website with downloadable teaching materials. 
See: https://sites.google.com/site/francescabarigozziunibo/teaching/micro2   

Links to further information

http://www2.dse.unibo.it/barigozzi/corsi/corsi.htm

Office hours

See the website of Francesca Barigozzi