Advanced Economic Theory

Catalog description

Advanced Economic Theory is focused on the effect of uncertainty on individual decisions, on the design of optimal contracts, and on competitive markets. Compared to Game Theory, we consider situations where agents have no strategic power, or where the strategic power is entirely in the hands of one party (for contract design). The course is divided into three blocks. In the first block, we review the standard model of expected utility that is used in economics, we investigate its foundations in absence of objective probabilities, and we study two fundamental applications at the core of macroeconomics and finance. In the second block, we study applied problems of information asymmetry in bilateral interactions, and the optimal contractual solutions for the uninformed party. In the third block, we analyze the effect of uncertainty on general equilibrium in multi-period competitive markets. Basic knowledge of multivariate calculus constitutes a necessary mathematical background to follow the course. Pre-requisites: ECON SHU 3 Microeconomics Fulfillment: Economics Major Advanced Economics Electives; Social Science Major Focus Courses Political Economy - 300 level.