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Table Of Contents

1.1 Nature of Modern Economics
1.1.1 Modern Economics and Economic Theory
1.1.2 Key Assumptions and Desired Properties Commonly Used
1.1.3 The Basic Analytical Framework of Modern Economics
1.1.4 Methodologies for Studying Modern Economics
1.1.5 Roles, Generality, and Limitation of Economic Theory
1.1.6 Roles of Mathematics in Modern Economics
1.1.7 Conversion between Economic and Mathematical Languages
as well Normative and Positive Statements
1.2 Language and Methods of Mathematics
1.2.1 Functions
1.2.2 Separating Hyperplane Theorem
1.2.3 Concave and Convex Functions
1.2.4 Optimization
1.2.5 The Envelope Theorem
1.2.6 Point-to-Set Mappings
1.2.7 Continuity of a Maximum
1.2.8 Fixed Point Theorems
2.1 Introduction
2.2 Consumption Set and Budget Constraint
2.2.1 Consumption Set
2.2.2 Budget Constraint
2.3 Preferences and Utility
2.3.1 Preferences
2.3.2 The Utility Function
2.4 Utility Maximization and Optimal Choice
2.4.1 Consumer Behavior: Utility Maximization
2.4.2 Consumer’s Optimal Choice
2.4.3 Consumer’s First Order-Conditions
2.4.4 Sufficiency of Consumer’s First-Order Conditions
2.5.1 The Indirect Utility Function
2.5.2 The Expenditure Function and Hicksian Demand
2.5.3 The Money Metric Utility Functions
2.5.4 Some Important Identities
2.6 Duality Between Direct and Indirect Utility
2.7 Properties of Consumer Demand
2.7.1 Income Changes and Consumption Choice
2.7.2 Price Changes and Consumption Choice
2.7.3 Income-Substitution Effect: The Slutsky Equation
2.7.4 Continuity and Differentiability of Demand Functions
2.7.5 Inverse Demand Functions
2.8 The Integrability Problem
2.9 Revealed Preference
2.9.1 Axioms of Revealed Preferences
2.9.2 Characterization of Revealed Preference Maximization
2.10 Recoverability
2.11 Topics in Demand Behavior
2.11.1 Endowments in the Budget Constraint
2.11.2 Income-Leisure Choice Model
2.11.3 Homothetic Utility Functions
2.11.4 Aggregating Across Goods
2.11.5 Aggregating Across Consumers
Production Theory
3.1 Introduction
3.2 Production Technology
3.2.1 Measurement of Inputs and Outputs
3.2.2 Specification of Technology
3.2.3 Common Properties of Production Sets
3.2.4 Returns to Scale
3.2.5 The Marginal Rate of Technical Substitution
3.2.6 The Elasticity of Substitution
3.3 Profit Maximization
3.3.1 Producer Behavior
3.3.2 Producer’s Optimal Choice
3.3.3 Producer’s First-Order Conditions
3.3.4 Sufficiency of Producer’s First-Order Condition
3.3.5 Properties of Net Supply Functions
3.3.6 Weak Axiom of Profit Maximization
3.3.7 Recoverability
3.4 Profit Function
3.4.1 Properties of the Profit Function
3.6.3 Average and Marginal Costs
3.6.4 The Geometry of Costs
3.6.5 Long-Run and Short-Run Cost Curves
3.7 Duality in Production
3.7.1 Recovering a Production Set from a Cost Function
3.7.2 Characterization of Cost Functions
3.7.3 The Integrability for Cost Functions
Choice Under Uncertainty
4.1 Introduction
4.2 Expected Utility Theory
4.2.1 Lotteries
4.2.2 Expected Utility
4.2.3 Uniqueness of the Expected Utility Function
4.2.4 Other Notations for Expected Utility
4.3 Risk aversion
4.3.1 Absolute Risk Aversion
4.3.2 Global Risk Aversion
4.3.3 Relative Risk Aversion
4.4 State Dependent Utility
4.5 Subjective Probability Theory
Strategic Behavior and Markets
Game Theory
5.1 Introduction
5.2 Description of a game
5.2.1 Strategic Form
5.3 Solution Concepts
5.3.1 Mixed Strategies and Pure Strategies
5.3.2 Nash equilibrium
5.3.3 Dominant strategies
5.4 Repeated games
5.5 Refinements of Nash equilibrium
5.5.1 Elimination of dominated strategies
5.5.2 Sequential Games and Subgame Perfect Equilibrium
5.5.3 Repeated games and subgame perfection
5.6 Games with incomplete information
5.6.1 Bayes-Nash Equilibrium
5.6.2 Discussion of Bayesian-Nash equilibrium
Theory of the Market
6.1 Introduction
6.2 The Role of Prices
6.3 Perfect Competition
6.3.1 Assumptions on Competitive Market
6.3.2 The Competitive Firm
6.3.3 The Competitive Firm’s Short-Run Supply Function
6.3.4 Partial Market Equilibrium
6.3.5 Competitive in the Long Run
6.4 Pure Monopoly
6.4.1 Profit Maximization Problem of Monopolist
6.4.2 Inefficiency of Monopoly
6.4.3 Monopoly in the Long Run
6.5 Monopolistic Competition
6.6 Oligopoly
6.6.1 Cournot Oligopoly
6.6.2 Stackelberg Model
6.6.3 Bertrand Model
6.6.4 Collusion
6.7 Monopsony
7.1 Introduction
7.2 The Structure of General Equilibrium Model
7.2.1 Economic Environments
7.2.2 Institutional Arrangement: Private Market Mechanism
7.2.3 Individual Behavior Assumptions:
7.2.4 Competitive Equilibrium
7.3 Some Examples of GE Models: Graphical Treat-
7.3.1 Pure Exchange Economies
7.4.1 The Existence of CE for Aggregate Excess Demand Func-
7.4.2 The Existence of CE for Aggregate Excess Demand Cor-
7.4.3 The Existence of CE for General Production Economies
7.5 The Uniqueness of Competitive Equilibria
7.6 Stability of Competitive Equilibrium
7.7 Abstract Economy
7.7.1 Equilibrium in Abstract Economy
7.7.2 The Existence of Equilibrium for General Preferences
8.1 Introduction
8.2 Pareto Efficiency of Allocation
8.3 The First Fundamental Theorem of Welfare Eco-
8.4 Calculations of Pareto Optimum by First-Order
8.4.1 Exchange Economies
8.4.2 Production Economies
8.5 The Second Fundamental Theorem of Welfare
8.6 Non-Convex Production Technologies and Marginal
8.7 Pareto Optimality and Social Welfare Maximiza-
8.7.1 Social Welfare Maximization for Exchange Economies
8.7.2 Welfare Maximization in Production Economy
8.8 Political Overtones
9.1 Introduction
9.2 The Core of Exchange Economies
9.3 Fairness of Allocation
9.4 Social Choice Theory
9.4.1 Introduction
9.4.2 Basic Settings
9.4.3 Arrow’s Impossibility Theorem
9.4.4 Some Positive Result: Restricted Domain
9.4.5 Gibbard-Satterthwaite Impossibility Theorem
10.1 Introduction
10.2 A Market Economy with Contingent Commodi-
10.3 Arrow-Debreu Equilibrium
equilibrium an Arrow-Debreu equilibrium
10.4 Sequential Trade
10.5 Incomplete Markets
Externalities and Public Goods
11.1 Introduction
11.2 Consumption Externalities
11.4.1 Pigovian Tax
11.4.3 Missing Market
11.4.4 The Compensation Mechanism
12.1 Introduction
12.2 Notations and Basic Settings
12.3 Discrete Public Goods
12.3.1 Efficient Provision of Public Goods
12.3.2 Free-Rider Problem
12.3.3 Voting for a Discrete Public Good
12.4 Continuous Public Goods
12.4.1 Efficient Provision of Public Goods
12.4.2 Lindahl Equilibrium
12.4.3 Free-Rider Problem
13.1 Introduction
13.2 Basic Settings of Principal-Agent Model with
13.2.2 Contracting Variables: Outcomes
13.2.3 Timing
13.3 The Complete Information Optimal Contract(Benchmark
13.3.1 First-Best Production Levels
13.3.2 Implementation of the First-Best
13.4 Incentive Feasible Contracts
13.4.1 Incentive Compatibility and Participation
13.4.2 Special Cases
13.4.3 Monotonicity Constraints
13.5 Information Rents
13.6 The Optimization Program of the Principal
13.7 The Rent Extraction-Efficiency Trade-Off
13.7.1 The Optimal Contract Under Asymmetric Information
13.7.2 A Graphical Representation of the Second-Best Outcome
13.7.3 Shutdown Policy
13.8 The Theory of the Firm Under Asymmetric In-
13.9 Asymmetric Information and Marginal Cost Pric-
13.10 The Revelation Principle
13.11 A More General Utility Function for the Agent
13.11.1 The Optimal Contract
13.11.2 More than One Good
13.12 Ex Ante versus Ex Post Participation Con-
13.12.1 Risk Neutrality
13.12.2 Risk Aversion
13.13 Commitment
13.13.1 Renegotiating a Contract
13.13.2 Reneging on a Contract
13.14 Informative Signals to Improve Contracting
13.14.1 Ex Post Verifiable Signal
13.14.2 Ex Ante Nonverifiable Signal
13.15 Contract Theory at Work
13.15.1 Regulation
13.15.2 Nonlinear Pricing by a Monopoly
13.15.3 Quality and Price Discrimination
13.15.4 Financial Contracts
13.15.5 Labor Contracts
13.16 The Optimal Contract with a Continuum of
13.17 Further Extensions
14.1 Introduction
14.2 Basic Settings of Principal-Agent Model with
14.2.1 Effort and Production
14.2.2 Incentive Feasible Contracts
14.2.3 The Complete Information Optimal Contract
14.3 Risk Neutrality and First-Best Implementation
14.5 The Trade-Off Between Insurance and Efficiency
14.5.1 Optimal Transfers
14.5.2 The Optimal Second-Best Effort
14.6 More than Two Levels of Performance
14.6.1 Limited Liability
14.6.2 Risk Aversion
14.7 Contract Theory at Work
14.7.1 Efficiency Wage
14.7.2 Sharecropping
14.7.3 Wholesale Contracts
14.7.4 Financial Contracts
14.8 A Continuum of Performances
15.3 Examples
15.4 Dominant Strategy and Truthful Revelation Mech-
15.5 Gibbard-Satterthwaite Impossibility Theorem
15.6 Hurwicz Impossibility Theorem
15.7 Vickrey-Clark-Groves Mechanisms
15.7.1 Vickrey-Clark-Groves Mechanisms for Discrete Public
15.7.2 The Vickrey-Clark-Groves Mechanisms with Continuous
15.7.3 Balanced VCG Mechanisms
15.8 Nash Implementation
15.8.1 Nash Equilibrium and General Mechanism Design
15.8.2 Characterization of Nash Implementation
15.9 Better Mechanism Design
15.9.1 Groves-Ledyard Mechanism
15.9.2 Walker’s Mechanism
15.9.3 Tian’s Mechanism
15.10 Incomplete Information and Bayesian-Nash Im-
15.10.1 Bayesian-Nash Implementation Problem
15.10.3 Participation Constraints
15.10.4 The Revenue Equivalence Theorem in Auctions
15.10.5 Correlated Types
15.10.6 Ex Post Implementation
15.10.7 Ex post Implementation with Common Values
Dynamic Mechanism Design
16.1 Dynamic Contracts with Commitment
16.1.1 Dynamic P-A Model with Constant Type
16.1.2 Dynamic P-A Model with Markov Types
16.2 Dynamic Contracts without Full Commitment
16.2.1 Basic Problem
16.2.2 Full Analysis of A Simple Model
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Published by: Dmitry Kurbakov on Dec 12, 2011
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