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More About This Textbook
Overview
Many instructors of microeconomic theory have been waiting for a text that provides balanced and indepth analysis of the essentials of microeconomics. Masterfully combining the results of years of teaching microeconomics at Harvard University, Andreu MasColell, Michael Whinston, and Jerry Green have filled that conspicuous vacancy with their groundbreaking text, Microeconomic Theory.
The authors set out to create a solid organizational foundation upon which to build the effective teaching tool for microeconomic theory. The result presents unprecedented depth of coverage in all the essential topics, while allowing professors to "tailormake" their course to suit personal priorities and style. Topics such as noncooperative game theory, information economics, mechanism design, and general equilibrium under uncertainty receive the attention that reflects their stature within the discipline. The authors devote an entire section to game theory alone, making it "freestanding" to allow instructors to return to it throughout the course when convenient. Discussion is clear, accessible, and engaging, enabling the student to gradually acquire confidence as well as proficiency. Extensive exercises within each chapter help students to hone their skills, while the text's appendix of terms, fully crossreferenced throughout the previous five sections, offers an accessible guide to the subject matter's terminology. Teachers of microeconomics need no longer rely upon scattered lecture notes to supplement their textbooks. Deftly written by three of the field's most influential scholars, Microeconomic Theory brings the readability, comprehensiveness, and versatility to the firstyear graduate classroom that has long been missing.
Editorial Reviews
From the Publisher
"Clear, comprehensive, and deep! The authors' treatment is both contemporary and probing, covering all aspects of modern microeconomic theory at a level accessible to graduate students, and which goes beyond simple statement of results to underscore the underlying intuition. This text should be a standard for graduate study in microeconomics!"—Lars Stole, University of Chicago"An excellent, comprehensive text."—Michael Jerison, SUNY at Albany
"Broader and deeper than any graduate microeconomics textbook I know."—Rajeev Dehejia, Harvard
"Outstanding! The choice of topics, coverage, and degree of sophistication is perfect for a firstyear graduate theory sequence."—Glenn MacDonald, W.E. Simm Graduate School of Business
"Extremely helpful as a teaching aid in a first year graduate theory course. It covers a great deal of material, motivating the material with informal discussion yet presenting it compactly and rigorously, with illuminating diagrams and formal examples. There is also a wealth of interesting homework problems."—Truman F. Bewley, Yale University
Product Details
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Meet the Author
Harvard University
Harvard University
Table of Contents
Part I: INDIVIDUAL DECISIONMAKING
Introduction to Part I
1. Preference and Choice
A. Introduction
B. Preference Relations
C. Choice Rules
D. The Relationship between Preference Relations and Choice Rules
Exercises
2. Consumer Choice
A. Introduction
B. Commodities
C. The Consumption Set
D. Competitive Budgets
E. Demand Functions and Comparartive Statics
F. The Weak Axiom of Revealed Preference and the Law of Demand
Exercises
3. Classical Demand Theory
A. Introduction
B. Preference Relations: Basic Properties
C. Preference and Utility
D. The Utility Maximization Problem
E. The Expenditure Minimization Problem
F. Duality: A Mathematical Introduction
G. Relationships between Demand, Indirect Utility, and Expenditure Functions
H. Integrability
I. Welfare Evaluation of Economic Changes
J. The Strong Axiom of Revealed Preference
Appendix: Continuity and Differentiability Properties of Walrasian Demand
Exercises
4. Aggregate Demand
A. Introduction
B. Aggregate Demand and Aggregate Wealth
C. Aggregate Demand and the Weak Axiom
D. Aggregate Demand and the Existence of a Representative Consumer
Appendix: Regularizing Effects of Aggregation
Exercises
5. Production
A. Introduction
B. Production Sets
C. Profit Maximization and Cost Minimization
D. The Geometry of Cost and Supply in the Single Output Case
E. Aggregation
F. Efficient Production
G. Remarks on the Objectives of the Firm
Appendix: The Linear Activity Model
Exercises
6. Choice under Uncertainty
A. Introduction
B. Expected Utility Theory
C. Money Lotteries and Risk Aversion
D. Comparison of Payoff Distributions in Terms of Return and Risk
E. State Dependent Utility
F. Subjective Probability Theory
Exercises
Part II: GAME THEORY
Introduction to Part II
7. Basic Elements of NonCooperative Games
A. Introduction
B. What is a Game?
C. The Extensive Form Representation of a Game
D. Strategies and the Normal Form Representation of a Game
E. Randomized Choices
Exercises
8. SimultaneousMove Games
A. Introduction
B. Dominant and Dominated Strategies
C. Rationalizable Strategies
D. Nash Equilibrium
E. Games of Incomplete Information: Bayesian Nash Equilibrium
F. The Possibility of Mistakes: TremblingHand Perfection
Appendix: Existence of Nash Equilibrium
Exercises
9. Dynamic Games
A. Introduction
B. Sequential Rationality, Backwards Induction, and Subgame Perfection
C. Sequential Rationality and OutofEquilibrium Beliefs
D. Reasonable Beliefs, Forward Induction, and Normal Form Refinements
Appendix A: Finite and Infinite Horizon Bilateral Bargaining
Appendix B: Extensive Form TremblingHand Perfection
Exercises
Part III: MARKET EQUILIBRIUM AND MARKET FAILURE
Introduction to Part III
10. Competitive Markets
A. Introduction
B. Pareto Optimality and Competitive Equilibria
C. Partial Equilibrium Competitive Analysis
D. The Fundamental Welfare Theorems in a Partial Equilibrium Context
E. Welfare Analysis in the Partial Equilibrium Model
F. FreeEntry and LongRun Competitive Equilibria
G. Concluding Remarks on Partial Equilibrium Analysis
Exercises
11. Externalities and Public Goods
A. Introduction
B. A Simple Bilateral Externality
C. Public Goods
D. Multilateral Externalities
E. Private Information and SecondBest Solutions
Appendix: NonConvexities and the Theory of Externalities
Exercises
12. Market Power
A. Introduction
B. Monopoly Pricing
C. Static Models of Oligopoly
D. Repeated Interaction
E. Entry
F. The Competitive Limit
G. Strategic Precommitments to Affect Future Competition
Appendix A: Infinitely Repeated Games and the Folk Theorem
Appendix B: Strategic Entry Deterrence and Accommodation
Exercises
13. Adverse Selection, Signalling, and Screening
A. Introduction
B. Informational Asymmetries and Adverse Selection
C. Signalling
D. Screening
Appendix: ReasonableBeliefs Refinements in Signalling Games
Exercises
14. The PrincipalAgent Problem
A. Introduction
B. Hidden Actions (Moral Hazard)
C. Hidden Information (and Monopolistic Screening)
D. Hidden Actions and Hidden Information: Hybrid Models
Appendix A: Multiple Effort Levels in the Hidden Action Model
Appendix B: A Formal Solution of the PrincipalAgent Problem with Hidden Information
Exercises
Part IV: GENERAL EQUILIBRIUM
Introduction to Part IV
15. General Equilibrium Theory: Some Examples
A. Introduction
B. Pure Exchange: The Edgeworth Box
C. The One ConsumerOne Producer Economy
D. The 2x2 Production Model
E. General versus Partial Equilibrium Theory
Exercises
16. Equilibrium and Its Basic Welfare Properties
A. Introduction
B. The Basic Model and Definitions
C. The First Fundamental Theorem of Welfare Economics
D. The Second Fundamental Theorem of Welfare Economics
E. Pareto Optimality and Social Welfare Optima
F. FirstOrder Conditions for Pareto Optimality
G. Some Applications
Appendix: Technical Properties of the Set of Feasible Allocations
Exercises
17. The Positive Theory of Equilibrium
A. Introduction
B. Equilibrium: Definitions and Basic Equations
C. Existence of Walrasian Equilibrium
D. Local Uniqueness and the Index Theorem
E. Anything Goes: The SonnenscheinMantelDebreu Theorem
F. Uniqueness of Equilibria
G. Comparative Statics Analysis
H. Tatonnement Stability
I. Large Economies and NonConvexities
Appendix A: Characterizing Equilibrium through Welfare Equations
Appendix B: A General Approach to the Existence of Walrasian Equilibrium
Exercises
18. Some Foundations for Competitive Equilibria
A. Introduction
B. Core and Equilibria
C. NonCooperative Foundations of Walrasian Equilibria
D. The Limits to Redistribution
E. Equilibrium and the Marginal Productivity Principle
Appendix: Cooperative Game Theory
Exercises
19. General Equilibrium under Uncertainty
A. Introduction
B. A Market Economy with Contingent Commodities: Description
C. ArrowDebreu Equilibrium
D. Sequential Trade
E. Asset Markets
F. Incomplete Markets
G. Firm Behavior in General Equilibrium Models under Uncertainty
H. Imperfect Information
Exercises
20. Equilibrium and Time
A. Introduction
B. Intertemporal Utility
C. Intertemporal Production and Efficiency
D. Equilibrium: The OneConsumer Case
E. Stationary Programs, Interest Rates, and Golden Rules
F. Dynamics
G. Equilibrium: Several Consumers
H. Overlapping Generations
I. Remarks on NonEquilibrium Dynamics: Tatonnement and Learning
Exercises
Part V: WELFARE ECONOMICS AND INCENTIVES
Introduction to Part V
21. Social Choice Theory
A. Introduction
B. A Special Case: Social Preferences over Two Alternatives
C. The General Case: Arrow's Impossibility Theorem
D. Some Possibility Results: Restricted Domains
E. Social Choice Functions
Exercises
22. Elements of Welfare Economics and Axiomatic Bargaining
A. Introduction
B. Utility Possibility Sets
C. Social Welfare Functions and Social Optima
D. Invariance Properties of Social Welfare Functions
E. The Axiomatic Bargaining Approach
F. Coalitional Bargaining: The Shapley Value
Exercises
23. Incentives and Mechanism Design
A. Introduction
B. The Mechanism Design Problem
C. Dominant Strategy Implementation
D. Bayesian Implementation
E. Participation Constraints
F. Optimal Bayesian Mechanisms
Appendix A: Implementation and Multiple Equilibria
Appendix B: Implementation in Environments with Complete Information
Exercises
Mathematical Appendix
A. Introduction
B. Homogeneous Functions and Euler's Formula
C. Concave and Quasiconcave Functions
D. Matrices: Negative (Semi)Definiteness and Other Properties
E. The Implicit Function Theorem
F. Continuous Functions and Compact Sets
G. Convex Sets and Separating Hyperplanes
H. Correspondences
I. Fixed Point Theorems
J. Unconstrained Maximization
K. Constrained Maximization
L. The Envelope Theorem
M. Linear Programming
N. Dynamic Programming