Econ 204B  Advanced Microeconomics II // Prof. Dan Friedman
Announcements
Answer key to final exam is now posted below. You can pick up your final exam from Dan after he returns from his roadtrip... Wed 24pm after May 5.
Advanced Microeconomic Theory II The second quarter of the Ph.D. microeconomics sequence, this course covers the fundamentals of information and decision theory, game theory and imperfect competition. There will be biweekly problem sets, a midterm and a final.
Students should own (or have regular access to) the principal text, Microeconomic Theory by MasColell, Whinston and Green (Oxford, 1995, ISBN=0195073401, denoted MWG below). They also should have at least occasional access to two secondary texts: The Analytics of Uncertainty and Information, by Hirshleifer and Riley (Cambridge University Press, 1992, denoted HR below) for information and decision theory, and Strategy: An Introduction to Game Theory, Second Edition by J. Watson (WW Norton, 2008, ISBN13=9780393929348 denoted W08 below) for game theory. It will be useful on occasion to consult the alternative texts A Course in Microeconomic Theory by David M. Kreps (Princeton University Press, 1990) and Microeconomic Analysis, 3rd Edition, by Hal R. Varian (Norton, 1992). All these books will be on reserve in the Science Library.
Lecture notes and supplemental readings will be posted below. Students are expected to help prepare one answer key during the quarter.
The class meets Tu Th 11:40am – 1:15PM in Porter Acad 250
Section meets W 3:004:00pm in 499 Engineering 2.
Office hours are W 2:003:00pm in 417 Engineering 2, and by appointment.
Due Dates
Review session 34pm Tues March 21, in 499 E2.
Final Exam in class 47 p.m. Wednesday, March 22.
Readings // // pracMT // notes12 // ps4 // ps3 // notes6 // finCS2017 // B+CoopGT // neExist // bss // All // krepsGs // EvGch2 // ps2 // notes7 // Nostes4 // RCs // akppfin // notes10 // fin // AkFin // duffy+feltovich // notes5 // FinCS // notes2 // mtcs // MTak // fo12 // akps1 // syl17 // RevPrin // Notes11 // mtppak // ppfinal // ps3ak // notes3 // akps2 // akps4 // Notes9 //

Answer key for Final Exam // Posted on May 8, 2017
Thanks to David Sungho Park for typesetting and polishing!
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answer key to final exam practice problems // Posted on March 20, 2017
Sorry for the large ugly file, but hopefully it is readable...
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official final cheat sheet // Posted on March 20, 2017
Thanks to Jianan, Mai and Yunxiao !
please let me know if you see any typos.
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Notes #12 // Posted on March 16, 2017
The last set of notes this quarter. It is intended to help make it easier to read MCWG. Lightly revised.
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Answer key to PS 4 // Posted on March 15, 2017
Thanks to Prateek, Dongwan, and Brett for assembling this answer key!
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Practice problems for final exam // Posted on March 14, 2017
The actual exam, unedited, from 3 years ago. Solutions were posted Monday March 20.
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Intro to the Revelation Priciple // Posted on March 14, 2017
Notes by John Morgan, an eminent UCB game theorist.
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Notes #11: signalling and screening // Posted on March 6, 2017
An introduction to signalling and screening models. You probably want to read this material in MCWG, or perhaps Gibbons.
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answer key to PS 3 // Posted on March 5, 2017
Thanks to Jianan, Ronchen, Mai and Yunxiao for putting this together! (slight repair monday evening.)
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Notes 10: Adverse selection // Posted on March 3, 2017
A short introduction to adverse selection in competitive equilibrium
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Notes #9: Imperfect competition // Posted on March 2, 2017
A sample of oligopoly models since 1830 expressed the language of game theory. Re revised.
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Notes #8: Bargaining and Coop Game Theory // Posted on March 1, 2017
These notes cover (very superficially) a variety of bargaining models and a bit of cooperative game theory. See other references for deeper treatments. Slightly revised.
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PS #4 // Posted on Feb. 27, 2017
The last problem set! Due in class Tues March 14
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Midterm Answer key // Posted on Feb. 24, 2017
Thanks to Ziyu and Weicheng! Revised edition
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Notes #6 // Posted on Feb. 14, 2017
Second draft of notes on repeated games.
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Notes #7 // Posted on Feb. 14, 2017
First draft of notes on evolutionary games. Not covered in your texts.
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Continuous Dilemma // Posted on Feb. 14, 2017
A repeated game in continuous time. Optional material, will not be on exams.
Some of the article is technical, but it makes two points that might be worth a thought. Cooperation rates are quite high in a finite horizon prisoner's dilemma game played out in essentially continuous time. And these can be explained by an extension of Radner's 1986 analysis, which introduces epsilon equilibria.
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Problem Set #3 // Posted on Feb. 10, 2017
Due in class Th March 2.
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Midterm Cheat sheet // Posted on Feb. 7, 2017
Thanks to Shuchen, Mai, Sungho, and Brett!
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Answer Key to PS 2 // Posted on Feb. 7, 2017
Answers to PS 2, thanks to David Sungho Park, lightly edited by DF... not totally checked, so please report any remaining issues.
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Answer Key for MT practice problems // Posted on Feb. 7, 2017
The answer key for practice problems posted earlier this week.
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Notes #5 // Posted on Feb. 2, 2017
Notes 5, on solving EFGs.
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Practice problems for midterm exam // Posted on Feb. 2, 2017
The actual exam from a few years ago. Solutions to be posted Feb 7.
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Notes #4 Solving NFGs // Posted on Jan. 27, 2017
Second draft of notes, still pretty rough. Be sure to read MCWG and other texts on this topic.
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PS 1 Answer Key // Posted on Jan. 23, 2017
Thanks to David and Shuchen!
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Problem Set #2 // Posted on Jan. 22, 2017
Second problem set, due in class Tues Feb 7.
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Notes #3 // Posted on Jan. 22, 2017
First notes on game theory. Be sure to read MCWG Ch07 as well, and an undergrad text in game theory is also recommended.
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Bayes spreadsheet // Posted on Jan. 16, 2017
An excel template for doing repetitive Bayesian calculations.
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Notes #2 // Posted on Jan. 16, 2017
Updated second installment of class notes.
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Notes #1. Risky Choice // Posted on Jan. 13, 2017
The current version corrects dozens of notational glitches and typos. Please let Dan know if you see any more that he missed (bonus points can be earned that way!).
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Problem Set #1 // Posted on Jan. 10, 2017
First problem set, due in class Tues Jan 24. Warning: some of these problems are challenging, so you are advised to try them right after relevant lectures.
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syllabus // Posted on Dec. 22, 2016
The course syllabus. May be updated from time to time.
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Proof that Nash Equilibrium exists in finite NFGs. // Posted on Jan. 30, 2014
Streamlined, selfcontained proof by Adam Brandenberger. Note that it works for all sorts of games that are not finite. Here is a challenge: find a game that has no NE even in mixed strategies. Easier: what can we say about the payoff function of such a game?
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Excerpt from book on EUH // Posted on Jan. 8, 2014
Chapter 5 from Risky Curves: On the Empirical Failure of Expected Utility, by Friedman, James, Issac and Sunder (Routledge, 2014)
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