Topics in Microeconomics (21931)
Choices, thinking in games, communication,
price formation, matching and mass media
Degree/study: ADE and Economics
Course: third and fourth
Term: Third
Number of ECTS credits: 5 credits
Hours of student’s dedication: 125 hours
Language or languages of instruction: English
Professors: Larbi Alaoui / Jose Apesteguia / Jan Eeckhout / Alexander Frug /
Fabrizio Germano / Andreu Mas-Colell / Rosemarie Nagel
1. Presentation of the subject
The course aims to cover advanced topics in microeconomics, from individual and
interactive decision-making, bounded rationality to strategic communication, mass
media and price formation. The lectures will cover theoretical, experimental and
empirical material. There is no single reference textbook but rather each instructor
will provide a list of articles and other references pertinent to the topics covered.
Microeconomics 1 and 2 (20836, 20838), as well as Introduction to Game Theory
(22102) are required. Having also taken the courses Information Economics (20854)
and Game Theory (21932) is highly recommended.
2. Competences to be attained
The student should learn how to think about and model aspects of political economy,
communication, media and social interactions more generally.
3. Content
Topic 1 Behavioral Decision Theory (Prof: Jose Apesteguia)
Topic 2 Interactive Decisions and Thinking in Games (Profs: Larbi Alaoui and
Fabrizio Germano)
Topic 3 Price Formation (Profs: Andreu Mas-Colell and Rosemarie Nagel)
Topic 4 Strategic Communication and Persuasion (Profs: Alexander Frug and
Fabrizio Germano)
Topic 5 Matching (Profs: Jan Eeckhout and Rosemarie Nagel)
Topic 6 Media Economics (Prof: Fabrizio Germano)
4. Course Evaluation
There will be three problem sets posted on aula global that are to be handed in one
or two weeks later as well as one short seminar presentation that can be done in
group and for which a short handout (about 4 pages long) has to be handed is; the
presentation is mandatory and will be in weeks 9 and 10 of the quarter in the
seminars. Grades are based on the final exam (50%), the class presentation (30%),
the problem sets (10%), and participation in experiments, class and seminars (10%).
A passing grade on the final exam is required to pass the class. There will be no
midterm.
5. Tentative Schedule
№
1.
2.
3.
4.
Week
11/4-15/4
18/4-22/4
25/4-29/4
2/5-6/5
5.
9/5-13/5
6.
16/5-16/5
7.
8.
23/5-27/5
30/5-3/6
9.
6/6-10/6
10.
13/6-17/6
Theory: ThFr 18:00-19:30
Apesteguia (Th/Fr) Behavioral Decisions
Apesteguia (Th/Fr) Behavioral Decisions
Germano (Th/Fr) Interactive Decisions
Alaoui (Th) Thinking in Games
Germano (Fr) Interactive Decisions
Germano (Th) Interactive Decisions
Mas-Colell (Fr) Price Formation
Nagel (Th) Price Formation
Germano (Fr) Strat. Communication
Germano (Th/Fr) Strat. Communication
Eeckhout (Th) Matching
Frug (Fr) Bayesian Persuasion
Frug (Th) Bayesian Persuasion
Germano (Fr) Media Economics
Germano (Th/Fr) Media Economcs
Seminars: We 9:00-10:30
Nagel (required)
Germano
Germano
Nagel (required)
Germano (required)
Germano (required)
Note: In Weeks 5 and 8 there will be an experiment in the seminar classes and
participation is required. In Weeks 9 and 10 there will be presentations in the
seminar classes and participation in these seminars is mandatory; a list of papers for
presentation will be posted early in the quarter; a detailed schedule will be
announced. The papers presented in the seminars will be exam relevant.
6. References
Topic 1 Behavioral Decision Theory
Classic theory review
-- Kreps (1988) Notes on the Theory of Choice, Underground Classics in Economics.
Experimental evidence
-- Thaler (2015) Misbehaving: The Making of Behavioral Economics, Norton.
Bounded rationality
-- Manzini, Mariotti (2007) Sequentially Rationalizable Choice, Amer Econ Rev,
97,1824-1839.
-- Masatlioglu, Nakajima, Ozbay (2012) Revealed Attention, Amer Econ Rev, 102,
2183-2205.
-- Bernheim, Rangel (2009) Beyond Revealed Preference: Choice-Theoretic
Foundations for Behavioral Welfare Economics” Quart J Econ, 124, 51-104.
Reference-dependence behavior
-- Kahneman, Tversky (1979) Prospect Theory: An Analysis of Decision Under Risk,
Econometrica, 47, 263-291.
-- Köszegi, Rabin (2006) A Model of Reference-Dependent Risk Attitudes, Amer
Econ Rev, 97, 1047-1073.
Topic 2 Interactive Decisions and Thinking in Games
Interactive decisions and higher order beliefs
-- Rubinstein (1989) The Electronic Mail Game: Strategic Behavior under 'Almost
Common Knowledge'," Amer Econ Rev, 79, 385-91.
-- Samuelson (2004) Modeling Knowledge in Economic Analysis, J Econ Lit, 42(2),
367-403.
Thinking in games
-- Camerer (2003) Behavioral Game Theory, Princeton University Press.
Topic 3 Price Formation
Topic 4 Strategic Communication and Bayesian Persuasion
Cheap talk:
-- Blume, Board, Kawamura (2007) Noisy Talk, Theor Econ, 2, 395-440.
-- Chakraborty, Harbaugh (2007) Comparative Cheap Talk, J Econ Theory, 132, 7094.
-- Chen, Kartik, Sobel (2008) Selecting Cheap-Talk Equilibria, Econometrica, 76,
375-393.
-- Crawford, Sobel (1982) Strategic Information Transmission, Econometrica, 50,
1431-1451.
-- Sobel (2013) Giving and Receiving Advice, in Advances in Economics and
Econometrics: Theory and Applications, Tenth World Congress, Acemoglu, Arellano,
Dekel (eds.), Cambridge University Press
Experts and Persuasion:
-- Gentzkow, Kamenica (2015) Competition in Persuasion, Mimeo.
-- Goltsman, Hörner, Pavlov, Squintani (2009) Mediation, Arbitration and Negotiation,
J Econ Theory, 144(4), 1397-1420.
-- Kamenica, Gentzkow (2011) Bayesian Persuasion, Amer Econ Rev, 101, 25902615.
-- Krishna, Morgan (2001) A Model of Expertise, Quart J Econ, 117, 747-775.
-- Krishna, Morgan (2004) The Art of Conversation: Eliciting Information from Experts
through Multi-Stage Communication, J Econ Theory, 117: 147-179
-- Milgrom (1981) Good News and Bad News, Bell J Econ, 21, 380-391.
Topic 5 Matching
Topic 6 Media Economics
-- Alaoui, Germano (2015) Time Scarcity and the Market for News, Mimeo, UPF.
-- Besley, Prat (2006) Handcuffs for the Grabbing Hand? Media Capture and
Government Accountability, Amer Econ Rev, 96: 720-736.
-- Gentzkow, Shapiro (2008) Competition and Truth in the Market for News, J Econ
Perspectives, 22, 133-154.
-- Gentzkow, Shapiro (2010) What Drives Media Slant? Evidence from U.S. Daily
Newspapers, Econometrica, 78, 35-71.
-- Germano, Meier (2013) Concentration and Self-Censorship in Commercial Media,
J Pub Econ, 97, 117-130.
-- Mullainathan, Shleifer (2005) The Market for News, Amer Econ Rev, 95,10311053.
-- Prat, Strömberg (2013) The Political Economy of Mass Media, in Advances in
Economics and Econometrics: Theory and Applications, Tenth World Congress,
Acemoglu, Arellano, Dekel (eds.), Cambridge University Press.