Microeconomic Principles – EC202

This course refers to the Academic Year 2013/2014

A link to the official page of the course is available here. The course, given by Prof Frank Cowell and Prof Leonardo Felli, is organized as follows:

1) 20 lectures in the first term focusing primarily on price-taking market behaviour by economic agents. Topics include the firm, the consumer, general equilibrium, uncertainty and risk, welfare economics. Where possible the similarity of the economic problems in each topic is exploited in order to highlight the reuse of results.

2) 20 lectures in the second term examining problems of strategic interaction among economic agents. This part of the course introduces fundamental concepts in microeconomic theory for strategic environments. The course begins with an introduction to game theory. Fundamental solution concepts are presented and discussed in detail. Static models of complete and incomplete information and dynamic models of complete information are covered in the course. The subgame perfect Folk theorem and its consequences on repeated interactions are detailed in a few lectures. Some of the most relevant applications of such models of behaviour are also introduced. Particular attention will be devoted to: imperfect competition, adverse selection, signalling, moral hazard, externalities and public goods.

For Groups 5, 6, 7 and 8 the weekly office hour is held in room 1.30 32L every Thursday from 13.30 to 14.30 (note tha change for the lent term); an additional office hour is scheduled on Thursday from 19 onward (for the room refer to the one where class 8 is scheduled every term).

Weekly Problem sets are due by Tuesday at 12 and need to be submitted at the pigeon hole·in room 1.01 in 32L assigned to “Nicola Limodio” (pigeon hole number 42); problem sets not handed in by 12 will be recorded as “unsubmitted” (I may provide exceptional permission for late submission, but it needs to be requested by mail and well in advance). Problem sets need to be clearly labelled and report on the top-right corner your full name (no nicknames), group number, submission date. Students may exceptionally submit by email, but the problem set needs to be sent with only one document and in pdf version. However the pdf submission is strongly discouraged and to be considered only in exceptional circumstances.

The weekly office hour is held on Thursday from 1.30 to 2.30 in 32L 1.30, in case of timetables clashes or problems alternative appointments shall be requested by mail or during classes.

As prescribed by Prof Cowell and Felli the grades assigned to each problem set span over the following range:

  • 70-100 -> A
  • 60-69 -> B
  • 50-59 -> C
  • 40-49 -> D
  • 0-39 -> F

all questions are given an equal weight.

The following textbooks are recommended:

F. A. Cowell,Microeconomics: Principles and Analysis (Oxford University Press 2006)
M. J Osborne, An Introduction to Game Theory (Oxford University Press, 2004)
B. Salanié, The Economics of Contracts: A Primer (MIT Press, 2005)

Throughout the year additional documents, clarifications and further material will be uploaded on this page. In case of any question do not hesitate to contact me.

Class 1: the first creative element was to get you to introduce yourselves and group up.

Class 2: a short video from one of my favourite series… to welcome new students/interns.

Class 3: an article on the Golden Age of Microeconomics.

Class 4: during last office hours some specific questions were raised and I prepared a small handout for everyone.

Class 5: a short video for those less convinced by why we need Math… not just in Economics… even to guide a ship in the sea… and also a less exciting, but more useful, note on general equilibrium and its interpretation as a Coalition-Proof Nash Equilibrium.

Class 6: a nice KAL’s cartoon on the funny politics of Economics.

Class 7: among universal languages there is Mathematics, possibly Economics… but not only these.

Class 8: as the Winter break approaches, I want to wish you all a nice break and a merry Christmas. Enclosed a beautiful Christmas carol from Southern Italy (here).

Class 9: welcome back! I wish you a bright and happy new year in London. Now back to SWF.

Class 10: now a tribute to a fantastic Italian movie released this year – The Great Beauty.

Class 11: continuing the movie momentum… check this documentary on the pitfalls of the economic profession

Class 12: on the beauty and surprise of research… the bionic hand.

Class 13: an (incorrect) description of Nash equilibrium concept (here).

Class 14: in case some time you woke up lazy (here).

Class 15: LSE third in the World among top schools for Economics and Econometrics (here)… hooray!

Class 16: getting closer to the end of the course… one of the most beautiful jazz standards ever (here ).

 Class 17: the term is almost over… and I am no Superman.

Class 18: a fun pic from phdcomics on Imaginary Mathematics .

Class 19: a document (here) answering the most important questions that you raised over the break.

Class 20: for the last class, we are going to discuss some previous points, go deep on general equilibrium (using some slides available here and a note on offer curve here) and then a nice song to laugh a bit (here).