Advanced Microeconomics (Master Economic Research)

• I updated the notes on mechanism design.
• Some notes on game theory were added (the password was announced in the lecture, please ask me if you missed it) where you can check how to determine Bayesian Nash equilibria in sections 1.2.1 and 1.2.2. Comments on these notes are very welcome.
• On May 2, we will talk about Bayesian Nash equilibrium. Please, have a look at the provided solutions for some of the BNE exercises before coming to class. To make up for the canceled lecture on April 25, we will have a Zoom meeting on Tuesday evening (May 7) at 17:30 in which we will talk about auctions. To keep the zoom meeting short, I will write down solutions to all the auction exercises beforehand and we will talk in the meeting only about specific questions that you have concerning either the screencast or the exercises/solutions. (Meeting ID: 991 9519 7189;Password: 519315)
• Due to health issues, there is no lecture on April 25. I will inform you as soon as I am better about a make up meeting.
• We will skip the topic "Nash equilibrium" and will talk about "Bayesian Nash equilibrium" on April 25. Please, watch screencasts 07-09 until then.

• exam date: July 18, 14:00-15:00 in the usual lecture room

• Thursday, 14:00-17:30, Seminarraum 3.03 (118/03/3.03)

Please, watch the screencasts provided below before coming to class. You have the option to ask questions about the material in the screencasts (and I might ask you a few questions to see whether things are clear). We will then do the exercises. In terms of preparation, you have to watch the screencasts and read through the exercises on the respective topic and think roughly 10 minutes about each of them. (Don't be discouraged if you do not manage to solve them quickly. Some of them are a bit tricky.) One organizational remark: as we have only one projector, it is useful to bring a printout of the exercises with you to class.

• link to screencasts for lecture material
• old exam
• Exercises: pdf, solutions for some exercises not covered in class
• Slides:
  • Dominance and rationalizability
  • Nash Theorem
  • BNE
  • auctions
  • SPNE
  • PBE
  • signaling
  • revelation principle
  • dominant strat. implementation
  • Myerson Satterthwaite
  • screening
  • optimal auctions
  • optimal trading mechanism and limit results, numerics
  • correlated information

• Handouts etc.:
  • math handout
  • notes (occassionally updated)
  • envelope theorem and monotonicity constraint

I assume that you have some introductory knowledge of game theory on the level of (Gibbons (1992)). In particular, you should know the material in chapters 1 and 2 in Gibbons' book (strategic form games, dominance, mixed strategies, mixed and pure Nash equilibrium, extensive form games, game trees, backwards induction, subgame perfect Nash equilibrium) and be able to apply it in simple games. From Advanced Microeconomics I, we build upon the part about decision making under uncertainty (expected utility theorem). In terms of mathematics, it is helpful to master the material of the course Advanced Mathematics for Economists. Having said that, most of the used math tools will not be far beyond high school maths. At the minimum you have to know (partial) differentiation, integration and optimization of functions and basic statistics (discrete and continuous probability distributions, expected values as well as Bayes' rule and conditional probabilities). More importantly, you should also have some idea of what a mathematical proof is. There is a handout on maths covering some of the prerequisites and topics that people tend to forget about quickly.

Most material is covered in (Mas-Colell, Whinston, and Green (1995)) which is abbreviated MWG in the following. Roughly speaking, we will cover chapters 8, 9, 13 and 23 from this book.

Some other interesting books on game theory covering the course material partially are

• (Fudenberg and Tirole (1991)) (FT): Covers an impressive amount of material in considerable depth at PhD level. Some of the proofs are, however, not fully worked out.
• (Maschler, Solan, and Zamir (2013)) (MSZ): Impresses with very clear proofs and fully worked out examples. Do, however, not expect to find much economics in this book.
• (Osborne and Rubinstein (1994)) (OR). A very nice book that is freely available for download from the authors' websites.

For mechanism design, (Börgers (2015)) is an excellent source which naturally covers much more than we do in the course.

The following plan is…well a plan…and as such it might be adapted to unforseen circumstances if necessary.