Econ 611 – Topics in Theoretical and Applied Microeconomics
Fall 2015
Professor William Neilson
Department of Economics
508 Stokely Management Center
(865) 974-1691
[email protected]
http://web.utk.edu/~wneilson
Office hours: Tuesday and Thursday 8:30 – 9:30 or by appointment
Description:
This course is really a course in applied microeconomic theory. Its primary purpose is to
develop a talent for constructing and analyzing microeconomic models that relate to problems of
interest. Because most applied micro theory done in the recent past uses game theory, that subject
is a major focus of the course.
We will cover a broad array of topics, primarily things that interest me personally. The topics
are there not so much to provide tools but instead to provide insight into how and why the theoretical
model is what it is.
The real goal of the course is to get you to be able to transform an idea into a mathematical
model. To make the grades consistent with it, most of your grade will be based on projects that
require you to do just this. The course will have limited writing requirements, but will be heavy on
presentations.
After all of this, here is what you should expect out of the course. (i) You should have a better
understanding of the ranking of journals and the differences between papers inside and outside of
the top journals. (ii) You should leave with an ability to take a vague economic idea and transform it
into a mathematical theory. (iii) You should be able to do a better job of presenting research. (iv) If
all goes well, you will leave with at least one idea that can lead to a paper.
Expectations:
The primary content of the course will be conveyed through lectures and readings. I expect
students to attend and participate in the lectures and to do the readings in advance. I have limited
myself to at most two readings per class meeting, which I do not consider an undue burden.
I will assume that all students come into the class with an understanding of mathematical
tools used in economics and an understanding of the game theoretic topics covered in Econ 512.
Grades:
The components of the course grade
are to the right. Class participation is
important and will be tracked. There are two
paper identification assignments early in the
semester that are worth 15% each, with the inclass presentation worth 10% and the written
assignment worth 5%. More details are found
in the course outline below. The remainder of
the grade is based on two group assignments
that will result in presentations to the class.
Texts: There is no required text.
The groups will differ between the
assignments. The group’s presenter will be
chosen randomly on the day of the
presentation.
Class participation
Paper identification
Group projects
20%
30%
50%
Late policy:
An assignment turned in late cannot receive a higher score than any assignment turned in
before it. An assignment turned in through incorrect channels (e.g. paper vs. email) will be
considered as turned in at the time it is turned in through correct channel.
Excused absences:
A student who misses an assignment with an excused absence should meet with the professor
to schedule a make-up opportunity at the professor’s convenience.
Readings and course outline
August 21
• Economics, economic theory, and journals
• Review of game theory, common games run in experiments
August 28
• Paper identification exercise 1 (15% of your course grade)
o Find a paper published in a top-5 journal during the last 4 years. Report to the class
the title, authors, their affiliations, and of course the journal. Report to the class the
paper’s question, the method they use to answer it, and the results. Most
importantly, report to the class why you think that this paper belongs in a top-5
journal. Plan on talking for about 5 minutes. (Top 5 journals are American
Economic Review except for the May issue, Econometrica, Quarterly Journal of
Economics, Journal of Political Economy, and Review of Economic Studies. There is a
one letter-grade penalty for using the May issue of AER or a journal outside of this
list.)
o A written version of your report (one single-spaced page) is due on Tuesday,
September 1. It should be emailed to Dr. Neilson at [email protected].
• Expected utility
o Chapter 6 of Andreu Mas-Colell, Michael Whinston, and Jerry Green (1995),
Microeconomic Theory.
September 4
• Paper identification exercise 2 (15% of your course grade)
o This is the same as paper identification exercise 1, except that the article must come
from a journal that is neither a top general-interest one nor a top field journal (that
is, a journal from the right-hand side of the attached list). Report on all of the same
issues, except at the end tell why the paper does not belong in a top journal. Do not
use a paper by anyone with a UTK affiliation.
o A written version of your report (one single-spaced page) is due on Tuesday,
September 8. It should be emailed to Dr. Neilson at [email protected].
• Existence of Nash equilibrium
o Mathematical appendices M.H and M.I in Andreu Mas-Colell, Michael Whinston, and
Jerry Green (1995), Microeconomic Theory.
September 11
• Repeated games
o Fudenberg, Drew and Eric Maskin (1986), The folk theorem in repeated games with
discounting or with incomplete information, Econometrica 54, 533-554.
o Benoit, Jean-Pierre and Vijay Krishna (1985), Finitely-repeated games, Econometrica
53, 905-922.
September 16 (Wednesday, room SMC 701, 8:30-11:30)
• Social norms
o Kandori, Michihiro (1992), Social norms and community enforcement, Review of
Economic Studies 59, 63-80.
o Akerlof, George and Rachel Kranton (2000), Economics and identity, Quarterly
Journal of Economics 115, 715-753.
September 25
• Networks
o DeMarzo, Peter, Dimitri Vayanos, and Jeffrey Zwiebel (2003), Persuasion bias, social
influence, and unidimensional opinions, Quarterly Journal of Economics 118, 909968.
o Golub, Ben and Matthew Jackson (2012), How homophily affects the speed of
learning and best-response dynamics, Quarterly Journal of Economics 127, 12871338.
October 2
• Axiomatic game theory
o Chapter 22 of Andreu Mas-Colell, Michael Whinston, and Jerry Green (1995),
Microeconomic Theory.
October 9 – group research project presentations (25% of your course grade)
October 16 – no class – Fall break
October 23
• Other-regarding preferences
o Fehr, Ernst and Klaus Schmidt (1999), A theory of fairness, competition, and
cooperation, Quarterly Journal of Economics 114, 817-868.
o Dufwenberg, Martin and Georg Kirchsteiger (2004), A theory of sequential
reciprocity, Games and Economic Behavior 47, 268-298.
October 30
• Subjective expected utility and ambiguity
o Neilson, William (2010), A simplified axiomatic approach to ambiguity aversion,
Journal of Risk and Uncertainty 41, 113-124.
November 6
• Attention
o Koszegi, Botond and Adam Szeidl (2013), A model of focusing in economic choice,
Quarterly Journal of Economics 128, 53-104.
o Bordalo, Pedro, Nicola Gennaioli, and Andrei Shleifer (2012), Salience theory of
choice under risk, Quarterly Journal of Economics 127, 1243-1285.
November 13
• Applied theory
o Baliga, Sandeep and Tomas Sjöstrom (2004), Arms races and negotiations, Review of
Economic Studies 71, 351-369.
o Hanna, Rema, Sendhil Mullainathan, and Joshua Schwartzstein (2014), Learning
through noticing: Theory and evidence from a field experiment, Quarterly Journal of
Economics 129, 1311-1353.
November 20 – group research project presentations (25% of your course grade)
Fine print:
Plagiarism and Academic Honesty:
"An essential feature of The University of Tennessee is a commitment to maintaining an atmosphere of
intellectual integrity and academic honesty. As a student of the University, I pledge that I will neither
knowingly give nor receive any inappropriate assistance in academic work, thus affirming my own
personal commitment to honor and integrity."
Please see www.lib.utk.edu/instruction/plagiarism/honor.html for more information.
Disabilities:
Students who have a disability that requires accommodation should make an appointment with the Office of
Disability Services (974-6087) to discuss their specific needs.
List of Targeted Economics Journals
Top half
Second half
Top 5
General interest
American Economic Review (not May issue)
Econometrica
Journal of Political Economy
Quarterly Journal of Economics
Review of Economic Studies
Canadian J. Economics
Economic Inquiry
Economics Letters
European Economic Review
J. Applied Econometrics
J. Economic Behavior & Organization
Quantitative Economics
Theoretical Economics
Second-tier general interest journals
Economic Journal
International Economic Review
J. Business and Economic Statistics
J. Economic Literature
J. European Economic Association
Review of Economics and Statistics
Highest-regarded field journals
American Econ Journal: Applied Economics
American Econ Journal: Economic Policy
American Econ Journal: Macroeconomics
American Econ Journal: Microeconomics
Games and Economic Behavior
J. Econometrics
J. Economic Theory
J. Financial Economics
J. International Economics
J. Labor Economics
J. Monetary Economics
J. Public Economics
Rand J. Economics
Field journals
Econometric Theory
Economic Theory
Economics of Education Review
International J. Industrial Organization
J. Assoc. of Env. & Resource Economists
J. Development Economics
J. Economic Dynamics and Control
J. Economic Growth
J. Economic History
J. Env. Economics & Management
J. Health Economics
J. Human Resources
J. Industrial Economics
J. Law and Economics
J. Law, Economics and Organization
J. Money Credit and Banking
J. Risk and Uncertainty
J. Urban Economics
National Tax Journal
Review of Economic Dynamics
Beware of “nearby” journals with similar names, like Journal of Economic Studies or International Economic Journal