This lecture delves deeper into microeconomics. We first revisit household decision making – a theme already encountered in the bachelor level micro course. We then deepen our understanding of concepts such as demand functions, indirect utility functions, welfare measures, endogenous income, exchange economy and the first and second fundamental theorem of welfare economics.
Although general equilibrium theory has something to say about efficiency, it is silent about which equilibrium should be chosen by society. We therefore look next at the problem of social choice and discover Arrow’s impossibility result: in geneneral, individual preferences cannot be aggregated into a social preferences except for the case where society’s preferences are dictated by a single individual. Stimualted by this negative result, we study mechanism design (Vickrey-Clark-Groves mechanism) and touch on auction theory.
- Lecture: 08:15 – 10:00 room 4.B54, University of Lucerne, starting September 17, 2015
- Exercises: 10:15 – 12:00 room HS13, University of Lucerne, starting October 8, 2015
- Tentative outline (as of September 3, 2015)
- Exam: December, 17 2015 room HS13
Advanced Microeconomic Theory, Geoffrey A. Jehle and Philip J. Reny, 2010, 3rd edition, Pearson Education.