Intermediate Microeconomics, Games and Behaviour

Course goals

Learning objectives     

At the end of the course, the student is able to:

• Analyse individual decision-making under risk and uncertainty using expected utility theory and related tools;
• Model firm behaviour and market equilibrium under different market structures;
• Analyse strategic interaction using discrete and repeated game models;
• Evaluate firm behaviour in oligopolistic markets using the Cournot, Bertrand, and Stackelberg frameworks;
• Understand the basic logic of auctions and bidding behaviour in private-value settings;
• Incorporate selected behavioural concepts—such as hyperbolic discounting and prospect theory—into standard microeconomic analysis;
• Formulate, solve, and interpret microeconomic models both algebraically and graphically.

Content

The course Intermediate Microeconomics: Games and Behaviour provides an analytical treatment of core topics in intermediate microeconomics, with emphasis on uncertainty, strategic interaction, and imperfect competition.

The course begins with decision-making under risk and uncertainty. Students study expected utility theory, risk aversion, insurance, and basic deviations from expected utility, drawing primarily on standard treatments in Pindyck and Rubinfeld. Selected behavioural extensions, including prospect theory and hyperbolic discounting, are introduced to contrast standard rational choice models with empirically observed behaviour.

The course then develops game-theoretic tools to analyse strategic interaction. Topics include discrete games, Nash equilibrium, and repeated games. Asymmetric information is introduced with limited formal treatment of signalling and screening.

A substantial part of the course focuses on market structure and firm behaviour. Models of oligopoly—Cournot, Bertrand, and Stackelberg—are studied in detail, including comparative statics and welfare implications.

Finally, the course introduces basic auction theory, drawing in part on chapters from Varian’s Intermediate Microeconomics, with emphasis on private-value auctions and equilibrium bidding strategies.

Throughout the course, students apply formal modelling techniques to analyse economic problems and interpret the implications of theoretical results.

Students are expected to have prior knowledge of consumer theory, producer theory, and competitive market equilibrium at the introductory microeconomics level.

Format 
Lectures and tutorials. 
The main focus of the lectures is on knowledge transfer and creating an understanding of the subject.
In the tutorials, assignments and typical exam questions will be worked out together so that you are well prepared for the midterm and the final exam. The main focus of the tutorials is to get you to work through exercises together and to answer your questions.

Academic skills
This course focuses on the following academic skills:
 
Analytical skills

• Being able to solve problems (identifying the problem, devising a path towards the solution, following this path, verifying the outcome) for more complex assignments.
• Being able to identify, interpret and critically evaluate the main line of reasoning, for more complex problems.
• Being able to evaluate evidence in text and presentations for more complex problems.

​Academic reasoning and working

• ​Thinking conceptually, thinking in terms of theory.
• Asking critical questions, having a curiosity-driven and critical attitude.
• Analyzing questions from different perspectives.
• Identifying links between problems. 

Effort requirements 
Students are expected to adequately prepare solutions to the weekly problem sets and to attend and participate in least 80% of the weekly tutorials.


In case online access is required for this course and you are not in the position to buy the access code, you are advised to contact the course coordinator for an alternative solution. Please note that access codes are not re-usable meaning that codes from second hand books do not work, as well as access codes from books with a different ISBN. Separate or spare codes are usually not available.