Microeconomic Principles – EC202

This course refers to the Academic Year 2015/2016

A link to the official page of the course is available here. The course, given by Prof Frank Cowell and Prof Alessandro Gavazza, 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 1 and 2 the weekly office hour is held in room 1.30 32L every Thirsday from 17.30 to 18.30, note that office hour slots need to be booked at least 24 hours in advance via LSE for You . In case of timetables clashes or problems alternative appointments shall be requested by mail or during classes.

Weekly Problem sets are due by Wednesday at 12 and need to be submitted at the pigeon hole number 43(room 1.01, 32L) and in the red folder assigned to “Nicola Limodio”; problem sets not handed in by 12 will be recorded as “not submitted” (I may provide exceptional permission for late submission, but it needs to be requested by mail, well in advance and with a valid reason).

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.

Anonymous Student Feedback : I am absolutely open to student feedback in any part of the course and would welcome mails with suggestions on how to make the class clearer, more interesting or intuitive. Feel free to mail me with this respect or in case you can use an anonymous feedback provider. By clicking on the “contact” part of my website, you have access to an anonymous form (instead of your name and email you can type “anonymous ec202 student” and as email ” [email protected]“). Everything will go through and, as the form is administered by a third party (foxyform.com), there is no possibility for your anonymity to be hurt.

As prescribed by Prof Cowell and Gavazza 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

Details: + or – refer to the upper or the lower part of the grade scale (ie. B+ is 66-69, B- is 60-63 and so on…), 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 tribute by the Economist to the Economics Nobel Prize Winner, Prof Angus Deaton, one of the greatest economists of our time. Here there is a great document by the Nobel Committee which I highlight during the class.

Class 3: this week I am in Addis Ababa and another teacher replaces me, she is outstanding so… enjoy the class!

Class 4: last bit on the Nobel prize of this year, let’s watch few minutes from Angus Deaton Press conference (here), it is inspiring.

Class 5: these two articles (here and here ) report reasons why the FED was under massive attack when QE was implemented back in 2010, focus on the relation between lowering interest rates and current consumption.

Class 6: this article (here) discusses QE and price increases, linking back to our discussion in class.

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

Class 8: 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 9: another article on the savings glut and its possible relation with the recent recession (here).