Intermediate Microeconomics

preliminary — subject to changes

Course Description

Optimal economic decision making on the level of individual economic units, in-depth study of (optimal) consumer decision-making, externalities, market failure, and behavioral economics.

Topics include, but are not limited to, choice under certainty, decisions under risk and uncertainty, intertemporal choice, market failure, externalities, and asymmetric information.

Course Objectives

The course will enable students to gain an in-depth understanding of individual decision making in the economy.

Course Materials

Required:

The course will follow:
Angner, E., 2016. A course in behavioral economics. 2nd ed.. Macmillan International Higher Education. [BE]
and
Varian, H.R., 2014. Intermediate microeconomics with calculus. WW Norton & Company. [IM]

The required and recommended readings from these two texts are indictaed below by “BE: chapter” and “IM: chapter”, respectively.

Course Requirements:

Students must read the corresponding chapters of the textbook before each session. Reading the economic and political press will also be helpful.

I recommend that you try to solve the end of chapter problems in preparation and review of each class session.

Class meets each Tuesday at 15:30 till 18:00. Please bring a hard copy of the problems we want to discuss (see below) to each class.

Electronic devices, i.e. laptops, are discouraged from use during class sessions. See http://economicscience.net/content/laptop-use/ for the reasons.

Instructor Information:

Prof. Dr. Dennis A. V. Dittrich
dennis.dittrich@touroberlin.de
http://economicscience.net

You can always contact me via email. For meetings in my office appointments can be arranged through the my webpage at: http://economicscience.net/content/book-appointment.

Updated information, links to the literature, additional materials, etc. can be found on my webpage as well.

Grading Guidelines:

Grading ComponentWeight
Quizzes & Problem Sets40%
Final Examination60%

Workload

A typical 3 credit course requires 150 hours of your time. The table below identifies how I expect those 150 hours will be allocated. While you do not receive direct marks for reading, reading will affect your class participation mark (your ability to participate in class discussions and activities) and your final exam mark.

ActivityTime
Class Time (3 hours / week)45 hours
Reading (3 hours / week)45 hours
Preparation, Problem Sets, and Review (4 hours / week)60 hours

Topics and Reading Assignments

Session 1

  • Introduction
  • Rational Choice under Certainty
    Readings
    • required: BE: 1 and 2
    • recommended: IM: 2–5

Session 2

  • Decision Making under Certainty
    Readings
    • required: BE: 3

Session 3

  • Probability Judgment
    Readings
    • required: BE: 4

Session 4

  • Judgment under Risk and Uncertainty
    Readings
    • required: BE: 5

Session 5

  • Rational Choice under Risk and Uncertainty
    Readings
    • required: BE: 6
    • recommended: IM: 12 and 13

Session 6

  • Decision Making under Risk and Uncertainty
    Readings
    • required: BE: 7

Session 7

  • The Discounted Utility Model
    Readings
    • required: BE: 8
  • Intertemporal Choice
    Readings
    • required: BE: 9
    • recommended: IM: 10

Session 8

  • Intertemporal Choice

Session 9

  • Game Theory
    Readings
    • required: BE: 10, IM: 29 and 30

Session 10

  • Behavioral Game Theory
    Readings
    • required: BE: 11

Session 11

  • Exchange
    Readings
    • required: IM: 32 and 33

Session 12

  • Welfare
    Readings
    • required: IM: 34 and BE: 12

Session 13

  • Externalities
    Readings
    • required: IM: 35

Session 14

  • Asymmetric Information
    Readings
    • required: IM: 38

Session 15

Final

Topics and reading assignments are subject to changes.

Problem sets

We will discuss problems – mostly taken from our textbook – in class. You will find the problems for download in a dropbox folder: here.

If you do not have a Dropbox account yet: Get one for free!