DOCSLIB.ORG

Economics 801 Microeconomic Theory I – Consumers and Markets

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Economics 801 Microeconomic Theory I – Consumers and Markets Department of Economics University of Wisconsin-Milwaukee Economics 801 Microeconomic Theory I – Consumers and Markets Fall 2014 When: Mondays and Wednesdays, 2:00-3:15 PM Where: Bolton B76 Professor: Scott Drewianka E-mail: [email protected] Office: Bolton 886 Office Hours: Mondays and Wednesdays, 3:30-5:00 PM Prerequisites: None, but Economics 506, 606, and 701 (or equivalent courses elsewhere) are strongly recommended. Goals of This Course: This course is the first Ph.D. level microeconomic theory course at this university. It is designed to be taken in conjunction with Economics 803, and together they serve as a foundation for advanced field courses. Students will become proficient with the tools and methodology of microeconomic theory and familiar with useful models and results. While we shall stress the importance of rigor, substantial emphasis will be given to the practical uses of economic theory, particularly in an applied context. Grading: Grades will be based on a midterm and final exam (40 percent each), homework (15 percent), and participation (5 percent). Exams: Midterm: Wednesday, October 22 Final: Tuesday, December 16, 12:30-2:30 PM (NOTE THE SPECIAL DAY AND TIME.) Expected time commitment: Plan to spend considerably more time than usual on this and all courses in the Ph.D. Core Sequence. While there will undoubtedly be great variation across students, the following is an approximate breakdown of time spent in Econ 801 by an average successful student: Class meetings and final exam (3 hours/week): 48 hours Problem sets (8 @ 2 hours each): 16 hours Reading and additional study (8 hours/week) : 128 hours 192 hours across the semester You are strongly advised not to shortchange yourself in this respect. This material is not only critical for the course itself, but also for the preliminary exams you will take next summer and for all subsequent courses – indeed, even for your career as a researcher. Time spent mastering this material thus has an unusually high expected return, and you are encouraged to invest in it accordingly. Homework: The purpose of homework is not to test your understanding (that is what exams are for), but rather to develop it. Mistakes are an opportunity to learn, provided that one puts in some thought and effort. Accordingly, full credit will be awarded on homework assignments whenever it is apparent that the student made a good-faith effort to solve the assigned problems, regardless of whether the student was ultimately successful. Students may work together but must submit their own work. Late work will not be accepted. A packet containing all of the assignments for the semester can be downloaded from the course webpage on D2L. Department/University Policies and Procedures: The Economics Department and UWM maintain official policies on academic conduct, incompletes, grade appeals and other complaints, participation by students with disabilities, accommodation of religious observances, sexual harassment, and other matters. Information on these policies is available in the Economics Department main office, or at http://www4.uwm.edu/secu/SyllabusLinks.pdf. All such policies are important, but please take special note of the policy on academic misconduct: http://www4.uwm.edu/acad_aff/policy/academicmisconduct.cfm. Students needing accommodations of any sort (including for disabilities or religious observances) should notify me during the first two weeks of class. H1N1 Virus Preparedness: As you may be aware, public health officials are concerned about a possible pandemic caused by the H1N1 virus (“swine flu”). Since the disease is spread primarily by personal contact, the University politely asks students not to shake hands, share food, and or take other actions that could transmit the virus. Please report illnesses via e-mail rather than in person. In the event of disruption of normal classroom activities due to an H1N1 swine flu outbreak, the format for this course MAY be modified to enable completion of the course. You would then be given an addendum to this syllabus that will supersede this version. Course Outline and Reading List Main Textbook: Varian, Hal R. 1992. Microeconomic Analysis, 3rd Ed. (New York: W.W. Norton). Additional Book (recommended, not required): Deaton, Angus, and John Muellbauer. Economics and Consumer Behavior. 1980. (New York: Cambridge University Press). A More Advanced Treatment (optional; the main text in Econ 803): Mas-Colell, Andreu, Michael D. Whinston, and Jerry R. Green. 1995. Microeconomic Theory (New York: Oxford University Press). A Good Book on Mathematics (optional; also used in Econ 803): Carter, Michael. 2001. Foundations of Mathematical Economics (Cambridge, MA: MIT Press). THE BOOKS LISTED ABOVE ARE AVAILABLE AT THE UWM BOOKSTORE. ALL READINGS LISTED BELOW CAN BE DOWNLOADED FROM THE COURSE PAGE ON D2L (UNDER THE MODULE “READINGS”) I. Introduction to Microeconomic Theory A. Purpose B. Distinguishing characteristics and methodology Readings: Becker, Gary S. 1976. “The Economic Approach to Human Behavior,” Ch. 1 of The Economic Approach to Human Behavior (Chicago: U. of Chicago Press), pp. 3-14. Optional: Kreps, David M. 1990. A Course in Microeconomic Theory (Princeton, NJ: Princeton U. Press). “Chapter 1: An Overview,” pp. 3-14. Friedman, Milton. 1966. “The Methodology of Positive Economics.” In Essays in Positive Economics (Chicago: U of Chicago Press): 3-43. II. Elements of Individual Optimization A. Producer optimization, supply, and profit B. Consumer optimization and demand theory C. Advanced topics in demand theory 1. Demand systems 2. Restrictions and observable implications of demand theory Readings: Deaton and Muellbauer, Chapters 1-3. Varian, Chapters 1-10, 12, 27. Mas-Colell et al., Chapters 1-3, 5. Optional: Browning, Martin, and Pierre-Andre Chiappori. 1998. “Efficient Intra-Household Allocations: A General Characterization and Empirical Tests.” Econometrica 66: 1241-78. III. Risk A. Risk versus (Knightian) uncertainty B. Expected utility and the von Neumann-Morgenstern utility function C. Measurement of risk preferences: absolute and relative risk aversion D. Pratt’s Theorem: Three equivalent methods of measuring risk aversion E. Increasing risk: stochastic dominance and mean-preserving spreads F. Variation on risk preferences: State-dependent utility Readings: Varian, Chapter 11, “Uncertainty,” pp. 172-97. Mas-Colell et al., Chapter 6. Deaton and Muellbauer, Chapter 14. Optional: Townsend, Robert M. 1993. The Medieval Village Economy (Princeton: Princeton University Press), Chapter 2. Rothschild, Michael, and Joseph E. Stiglitz. 1970. “Increasing Risk: I. A Definition.” Journal of Economic Theory 2: 225-43. Rothschild, Michael, and Joseph E. Stiglitz. 1971. “Increasing Risk II: Its Economic Consequences.” Journal of Economic Theory 3: 66-84. Pratt, John W. 1964. “Risk Aversion in the Small and in the Large.” Econometrica 32: 122-36. Eisner, Robert and Robert H. Strotz. 1961. “Flight Insurance and the Theory of Choice.” Journal of Political Economy 69: 355-68. Arrow, Kenneth. 1974. “Optimal Insurance and Generalized Deductibles.” Scandinavian Actuarial Journal 1: 1-42. Kimball, Miles. 1990. “Precautionary Savings in the Small and the Large.” Econometrica 58: 53-73. Chetty, Raj. 2006. “A New Method of Estimating Risk Aversion.” American Economic Review 96: 1821-34. Chetty, Raj, and Adam Szeidl. 2007. “Consumption Commitments and Risk Preferences.” Quarterly Journal of Economics 122, pp. 831-77. Gilboa, Itzhak, Andrew W. Postlewaite, and David Schmeidler. 2008. “Probability and Uncertainty in Economic Modeling.” Journal of Economic Perspectives 22, pp. 173-88. Finkelstein, Amy, Erzo F.P. Luttmer, and Matthew J. Notowidigdo. 2013. “What Good is Wealth without Health? The Effect of Health on the Marginal Utility of Consumption.” Journal of the European Economic Association 11(S1), pp. 221–258. IV. Intertemporal Economics and Investments A. Investment without uncertainty 1. Consumption smoothing 2. Investment in specific assets over the business cycle B. Investment under uncertainty i. Arrow-Debreu markets and no-arbitrage pricing ii. Capital Asset Pricing Model iii. Option value and the Black-Scholes Theorem C. Variations on intertemporal preferences i. Hyperbolic discounting ii. Rational addiction Readings: Varian, Chapter 20, “Asset Markets,” pp. 368-86. Mas-Collel et al., Chapters 19A-E and 20A-B. Deaton and Muellbauer, Chapters 4.2, 12-13 Optional: Laibson, David. 1997. "Golden Eggs and Hyperbolic Discounting." Quarterly Journal of Economics 112, pp. 443-477. Stigler, George J., and Gary S. Becker. 1977. “De Gustibus Non Est Disputandum.” American Economic Review 67: 76- 90. Mincer, Jacob, and Solomon Polachek. 1974. “Family Investments in Human Capital: Earnings of Women.” Journal of Political Economy 82: S76-S108. Becker, Gary S., and Kevin M. Murphy. 1988. “A Theory of Rational Addiction.” Journal of Political Economy 96: 675-700. Dixit, Avinash K., and Robert S. Pyndyck. 1994. Investment Under Uncertainty. (Princeton, NJ: Princeton University Press). (Chs. 1 & 2 are a good introduction; Chs. 3 & 4 present the mathematical topics needed for the rest of the book). Rosen, Sherwin. 1999. ``Potato Paradoxes.’’ Journal of Political Economy 107: S294-S313. Hendel, Igal, and Alessandro Lizzeri. 2002. “The Role of Leasing Under Adverse Selection.” Journal of Political Economy 110: 113-143. McClure, Samuel M., David I. Laibson, George Lowenstein, and Jonathan D. Cohen. 2004. “Separate Neural Systems Value Immediate and Delayed Monetary
Load more

Recommended publications
  • Introduction to Computational Social Choice
    1 Introduction to Computational Social Choice Felix Brandta, Vincent Conitzerb, Ulle Endrissc, J´er^omeLangd, and Ariel D. Procacciae 1.1 Computational Social Choice at a Glance Social choice theory is the field of scientific inquiry that studies the aggregation of individual preferences towards a collective choice. For example, social choice theorists|who hail from a range of different disciplines, including mathematics, economics, and political science|are interested in the design and theoretical evalu- ation of voting rules. Questions of social choice have stimulated intellectual thought for centuries. Over time the topic has fascinated many a great mind, from the Mar- quis de Condorcet and Pierre-Simon de Laplace, through Charles Dodgson (better known as Lewis Carroll, the author of Alice in Wonderland), to Nobel Laureates such as Kenneth Arrow, Amartya Sen, and Lloyd Shapley. Computational social choice (COMSOC), by comparison, is a very young field that formed only in the early 2000s. There were, however, a few precursors. For instance, David Gale and Lloyd Shapley's algorithm for finding stable matchings between two groups of people with preferences over each other, dating back to 1962, truly had a computational flavor. And in the late 1980s, a series of papers by John Bartholdi, Craig Tovey, and Michael Trick showed that, on the one hand, computational complexity, as studied in theoretical computer science, can serve as a barrier against strategic manipulation in elections, but on the other hand, it can also prevent the efficient use of some voting rules altogether. Around the same time, a research group around Bernard Monjardet and Olivier Hudry also started to study the computational complexity of preference aggregation procedures.
    [Show full text]
  • Stable Matching: Theory, Evidence, and Practical Design
    THE PRIZE IN ECONOMIC SCIENCES 2012 INFORMATION FOR THE PUBLIC Stable matching: Theory, evidence, and practical design This year’s Prize to Lloyd Shapley and Alvin Roth extends from abstract theory developed in the 1960s, over empirical work in the 1980s, to ongoing efforts to fnd practical solutions to real-world prob- lems. Examples include the assignment of new doctors to hospitals, students to schools, and human organs for transplant to recipients. Lloyd Shapley made the early theoretical contributions, which were unexpectedly adopted two decades later when Alvin Roth investigated the market for U.S. doctors. His fndings generated further analytical developments, as well as practical design of market institutions. Traditional economic analysis studies markets where prices adjust so that supply equals demand. Both theory and practice show that markets function well in many cases. But in some situations, the standard market mechanism encounters problems, and there are cases where prices cannot be used at all to allocate resources. For example, many schools and universities are prevented from charging tuition fees and, in the case of human organs for transplants, monetary payments are ruled out on ethical grounds. Yet, in these – and many other – cases, an allocation has to be made. How do such processes actually work, and when is the outcome efcient? Matching theory The Gale-Shapley algorithm Analysis of allocation mechanisms relies on a rather abstract idea. If rational people – who know their best interests and behave accordingly – simply engage in unrestricted mutual trade, then the outcome should be efcient. If it is not, some individuals would devise new trades that made them better of.
    [Show full text]
  • The Portfolio Optimization Performance During Malaysia's
    Modern Applied Science; Vol. 14, No. 4; 2020 ISSN 1913-1844 E-ISSN 1913-1852 Published by Canadian Center of Science and Education The Portfolio Optimization Performance during Malaysia’s 2018 General Election by Using Noncooperative and Cooperative Game Theory Approach Muhammad Akram Ramadhan bin Ibrahim1, Pah Chin Hee1, Mohd Aminul Islam1 & Hafizah Bahaludin1 1Department of Computational and Theoretical Sciences Kulliyyah of Science International Islamic University Malaysia, 25200 Kuantan, Pahang, Malaysia Correspondence: Pah Chin Hee, Department of Computational and Theoretical Sciences, Kulliyyah of Science, International Islamic University Malaysia, 25200 Kuantan, Pahang, Malaysia. Received: February 10, 2020 Accepted: February 28, 2020 Online Published: March 4, 2020 doi:10.5539/mas.v14n4p1 URL: https://doi.org/10.5539/mas.v14n4p1 Abstract Game theory approach is used in this study that involves two types of games which are noncooperative and cooperative. Noncooperative game is used to get the equilibrium solutions from each payoff matrix. From the solutions, the values then be used as characteristic functions of Shapley value solution concept in cooperative game. In this paper, the sectors are divided into three groups where each sector will have three different stocks for the game. This study used the companies that listed in Bursa Malaysia and the prices of each stock listed in this research obtained from Datastream. The rate of return of stocks are considered as an input to get the payoff from each stock and its coalition sectors. The value of game for each sector is obtained using Shapley value solution concepts formula to find the optimal increase of the returns. The Shapley optimal portfolio, naive diversification portfolio and market portfolio performances have been calculated by using Sharpe ratio.
    [Show full text]
  • Introduction to Computational Social Choice Felix Brandt, Vincent Conitzer, Ulle Endriss, Jérôme Lang, Ariel D
    Introduction to Computational Social Choice Felix Brandt, Vincent Conitzer, Ulle Endriss, Jérôme Lang, Ariel D. Procaccia To cite this version: Felix Brandt, Vincent Conitzer, Ulle Endriss, Jérôme Lang, Ariel D. Procaccia. Introduction to Computational Social Choice. Felix Brandt, Vincent Conitzer, Ulle Endriss, Jérôme Lang, Ariel D. Procaccia, Handbook of Computational Social Choice, Cambridge University Press, pp.1-29, 2016, 9781107446984. 10.1017/CBO9781107446984. hal-01493516 HAL Id: hal-01493516 https://hal.archives-ouvertes.fr/hal-01493516 Submitted on 21 Mar 2017 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. 1 Introduction to Computational Social Choice Felix Brandta, Vincent Conitzerb, Ulle Endrissc, J´er^omeLangd, and Ariel D. Procacciae 1.1 Computational Social Choice at a Glance Social choice theory is the field of scientific inquiry that studies the aggregation of individual preferences towards a collective choice. For example, social choice theorists|who hail from a range of different disciplines, including mathematics, economics, and political science|are interested in the design and theoretical evalu- ation of voting rules. Questions of social choice have stimulated intellectual thought for centuries. Over time the topic has fascinated many a great mind, from the Mar- quis de Condorcet and Pierre-Simon de Laplace, through Charles Dodgson (better known as Lewis Carroll, the author of Alice in Wonderland), to Nobel Laureates such as Kenneth Arrow, Amartya Sen, and Lloyd Shapley.
    [Show full text]
  • 3 Nobel Laureates to Honor UCI's Duncan Luce
    3 Nobel laureates to honor UCI’s Duncan Luce January 25th, 2008 by grobbins Three recent winners of the Nobel Prize in economics will visit UC Irvine today and Saturday to honor mathematician-psychologist Duncan Luce, who shook the economics world 50 years ago with a landmark book on game theory. Game theory is the mathematical study of conflict and interaction among people. Luce and his co-author, Howard Raiffa, laid out some of the most basic principles and insights about the field in their book, “Games and Decisions: Introductions and Critical Survey.” That book, and seminal equations Luce later wrote that helped explain and predict a wide range of human behavior, including decision-making involving risk, earned him the National Medal of Science, which he received from President Bush in 2005. (See photo.) UCI mathematican Don Saari put together a celebratory conference to honor both Luce and Raiffa, and he recruited some of the world’s best-known economic scientists. It’s one of the largest such gatherings since UCI hosted 17 Nobel laureates in October 1996. “Luce and Raiffa’s book has been tremendously influential and we wanted to honor them,” said Saari, a member of the National Academy of Sciences. Luce said Thursday night, “This is obviously very flattering, and it’s amazing that the book is sufficiently alive that people would want to honor it.” The visitors scheduled to attended the celebratory conference include: Thomas Schelling, who won the 2005 Nobel in economics for his research on game theory Roger Myerson and Eric Maskin, who shared the 2007 Nobel in economics for their work in design theory.
    [Show full text]
  • Chemical Game Theory
    Chemical Game Theory Jacob Kautzky Group Meeting February 26th, 2020 What is game theory? Game theory is the study of the ways in which interacting choices of rational agents produce outcomes with respect to the utilities of those agents Why do we care about game theory? 11 nobel prizes in economics 1994 – “for their pioneering analysis of equilibria in the thoery of non-cooperative games” John Nash Reinhard Selten John Harsanyi 2005 – “for having enhanced our understanding of conflict and cooperation through game-theory” Robert Aumann Thomas Schelling Why do we care about game theory? 2007 – “for having laid the foundatiouns of mechanism design theory” Leonid Hurwicz Eric Maskin Roger Myerson 2012 – “for the theory of stable allocations and the practice of market design” Alvin Roth Lloyd Shapley 2014 – “for his analysis of market power and regulation” Jean Tirole Why do we care about game theory? Mathematics Business Biology Engineering Sociology Philosophy Computer Science Political Science Chemistry Why do we care about game theory? Plato, 5th Century BCE Initial insights into game theory can be seen in Plato’s work Theories on prisoner desertions Cortez, 1517 Shakespeare’s Henry V, 1599 Hobbes’ Leviathan, 1651 Henry orders the French prisoners “burn the ships” executed infront of the French army First mathematical theory of games was published in 1944 by John von Neumann and Oskar Morgenstern Chemical Game Theory Basics of Game Theory Prisoners Dilemma Battle of the Sexes Rock Paper Scissors Centipede Game Iterated Prisoners Dilemma
    [Show full text]
  • Chronology of Game Theory
    Chronology of Game Theory http://www.econ.canterbury.ac.nz/personal_pages/paul_walker/g... Home | UC Home | Econ. Department | Chronology of Game Theory | Nobel Prize A Chronology of Game Theory by Paul Walker September 2012 | Ancient | 1700 | 1800 | 1900 | 1950 | 1960 | 1970 | 1980 | 1990 | Nobel Prize | 2nd Nobel Prize | 3rd Nobel Prize | 0-500AD The Babylonian Talmud is the compilation of ancient law and tradition set down during the first five centuries A.D. which serves as the basis of Jewish religious, criminal and civil law. One problem discussed in the Talmud is the so called marriage contract problem: a man has three wives whose marriage contracts specify that in the case of this death they receive 100, 200 and 300 respectively. The Talmud gives apparently contradictory recommendations. Where the man dies leaving an estate of only 100, the Talmud recommends equal division. However, if the estate is worth 300 it recommends proportional division (50,100,150), while for an estate of 200, its recommendation of (50,75,75) is a complete mystery. This particular Mishna has baffled Talmudic scholars for two millennia. In 1985, it was recognised that the Talmud anticipates the modern theory of cooperative games. Each solution corresponds to the nucleolus of an appropriately defined game. 1713 In a letter dated 13 November 1713 Francis Waldegrave provided the first, known, minimax mixed strategy solution to a two-person game. Waldegrave wrote the letter, about a two-person version of the card game le Her, to Pierre-Remond de Montmort who in turn wrote to Nicolas Bernoulli, including in his letter a discussion of the Waldegrave solution.
    [Show full text]
  • How to Build an Institution
    POSXXX10.1177/0048393120971545Philosophy of the Social Sciencevan Basshuysen 971545research-article2020 Article Philosophy of the Social Sciences 1 –24 How to Build an © The Author(s) 2020 Institution https://doi.org/10.1177/0048393120971545Article reuse guidelines: sagepub.com/journals-permissions DOI: 10.1177/0048393120971545 journals.sagepub.com/home/pos Philippe van Basshuysen1 Abstract How should institutions be designed that “work” in bringing about desirable social outcomes? I study a case of successful institutional design—the redesign of the National Resident Matching Program—and argue that economists assume three roles when designing an institution, each of which complements the other two: first, the designer combines positive and normative modeling to formalize policy goals and to design possible mechanisms for bringing them about. Second, the engineer refines the design by conducting experiments and computational analyses. Third, the plumber implements the design in the real world and mends it as needed. Keywords economic design, engineering, plumbing, normative modeling, algorithmic bias 1. Introduction Economists increasingly aspire to create or change institutions in order to bring about desirable social outcomes. While this field of economic design is growing, philosophers of social science have to date focused on a single case, namely the design of the early spectrum auctions conducted by the Federal Communications Commission (FCC) (Alexandrova 2008; Guala 2005). But by focusing on one case only, they have fallen short of providing a general Received 11 October 2020 1Leibniz University Hannover, Hannover, Germany Corresponding Author: Philippe van Basshuysen, Leibniz University Hannover, Im Moore 21, 30167 Hannover, Germany. Email: [email protected] 2 Philosophy of the Social Sciences 00(0) account of the practice of economic design.
    [Show full text]
  • An Introduction to Game Theory
    An Introduction to Game Theory E.N.Barron Supported by NSF DMS-1008602 Department of Mathematics and Statistics, Loyola University Chicago April 2013 Zero Sum Games Non Zero Sum Games Cooperative Games Game Theory Nobel Prize winners Lloyd Shapley 2012 Alvin Roth 2012 Roger B. Myerson 2007 Leonid Hurwicz 2007 Eric S. Maskin 2007 Robert J. Aumann 2005 Thomas C. Schelling 2005 William Vickrey 1996 Robert E. Lucas Jr. 1995 John C. Harsanyi 1994 John F. Nash Jr. 1994 Reinhard Selten 1994 Kenneth J. Arrow 1972 Paul A. Samuelson 1970 Barron Game Theory Zero Sum Games Non Zero Sum Games Cooperative Games Zero Sum Games{John von Neumann The rules, the game: I made a game effort to argue but two things were against me: the umpires and the rules.{Leo Durocher Barron Game Theory Zero Sum Games Non Zero Sum Games Cooperative Games Zero Sum Games In a simplified analysis of a football game suppose that the offense can only choose a pass or run, and the defense can choose only to defend a pass or run. Here is the matrix in which the payoffs are the average yards gained: Defense Offense Run Pass Run 1 8 Pass 10 0 The offense’s goal is to maximize the average yards gained per play. The defense wants to minimize it. Barron Game Theory Zero Sum Games Non Zero Sum Games Cooperative Games In the immortal words of mothers everywhere: You can't always get what you want{Rolling Stones. Barron Game Theory Zero Sum Games Non Zero Sum Games Cooperative Games Zero Sum Games Pure saddle point row i ∗, column j∗: aij∗ ≤ ai ∗j∗ ≤ ai ∗j ; for all i; j Defense Offense Run Pass Run 1 8 Pass 10 0 No PURE strategies as a saddle point: Largest in row and smallest in column{simultaneously.
    [Show full text]
  • Ideological Profiles of the Economics Laureates · Econ Journal Watch
    Discuss this article at Journaltalk: http://journaltalk.net/articles/5811 ECON JOURNAL WATCH 10(3) September 2013: 255-682 Ideological Profiles of the Economics Laureates LINK TO ABSTRACT This document contains ideological profiles of the 71 Nobel laureates in economics, 1969–2012. It is the chief part of the project called “Ideological Migration of the Economics Laureates,” presented in the September 2013 issue of Econ Journal Watch. A formal table of contents for this document begins on the next page. The document can also be navigated by clicking on a laureate’s name in the table below to jump to his or her profile (and at the bottom of every page there is a link back to this navigation table). Navigation Table Akerlof Allais Arrow Aumann Becker Buchanan Coase Debreu Diamond Engle Fogel Friedman Frisch Granger Haavelmo Harsanyi Hayek Heckman Hicks Hurwicz Kahneman Kantorovich Klein Koopmans Krugman Kuznets Kydland Leontief Lewis Lucas Markowitz Maskin McFadden Meade Merton Miller Mirrlees Modigliani Mortensen Mundell Myerson Myrdal Nash North Ohlin Ostrom Phelps Pissarides Prescott Roth Samuelson Sargent Schelling Scholes Schultz Selten Sen Shapley Sharpe Simon Sims Smith Solow Spence Stigler Stiglitz Stone Tinbergen Tobin Vickrey Williamson jump to navigation table 255 VOLUME 10, NUMBER 3, SEPTEMBER 2013 ECON JOURNAL WATCH George A. Akerlof by Daniel B. Klein, Ryan Daza, and Hannah Mead 258-264 Maurice Allais by Daniel B. Klein, Ryan Daza, and Hannah Mead 264-267 Kenneth J. Arrow by Daniel B. Klein 268-281 Robert J. Aumann by Daniel B. Klein, Ryan Daza, and Hannah Mead 281-284 Gary S. Becker by Daniel B.
    [Show full text]
  • Shapley and Roth Awarded Nobel Prize in Economics
    Shapley and Roth Awarded Nobel Prize in Economics Lloyd S. Shapley, professor emeritus of econom- far-reaching consequences: In the first half of the ics and mathematics at the University of California, twentieth century, the U.S. market for assigning Los Angeles, and Alvin E. Roth, George Gund medical students to hospitals (for the purpose of Professor of Economics and Business Administra- doing their residencies) had been in continuous tion at Harvard University and Harvard Business turmoil. In the early 1950s, the American Hospital School, have been awarded the 2012 Nobel Prize Association (AHA) introduced a computer algo- in Economics “for the theory of stable allocations rithm for making these assignments, whereupon and the practice of market design.” Though they the previously chaotic market immediately became worked independently of each other, the combina- orderly. And Roth showed that the AHA algorithm tion of Shapley’s basic theory and Roth’s empirical was precisely the same as that of Gale and Shapley, investigations, experiments, and practical design though neither the AHA nor the inventors of their has generated a flourishing field of research and algorithm were familiar with the relevant theory. improved the performance of many markets. This discovery opened the door to the applica- On the Work of Roth and Shapley tion of the Gale-Shapley algorithm to a wide variety The Notices asked Robert Aumann of the Hebrew of important matching markets: in addition to the University of Jerusalem to comment on the work of medical programs, perhaps most importantly to Alvin Roth and Lloyd Shapley. Aumann supplied the very large-scale programs of assigning students following description of their work.
    [Show full text]
  • Math 464: Linear Optimization and Game
    Math 464: Linear Optimization and Game Haijun Li Department of Mathematics Washington State University Spring 2013 Assumptions in Non-Cooperative Games Prisoners’ Dilemma, Again 1 Cooperation does not occur in prisoners’ dilemma, because players cannot make binding agreements. 2 But what if binding agreements are possible? 3 This is exactly the class of scenarios studied in cooperative game theory. Cooperative Games • Players form coalitions with some binding agreements. • Each coalition chooses its action (collective strategy), and players can benefit by cooperating within each coalition. • Non-transferable utility (NTU) games: the choice of coalitional actions (by all coalitions) determines each player’s payoff. • Transferable utility (TU) games: the choice of coalitional actions (by all coalitions) determines the payoff of each coalition. The members of the coalition then need to divide this joint payoff. NTU Games: Joint Publication Example • n researchers working at n different universities can form groups to write papers on probability theory. • Each group of researchers can work together; the composition of a group determines the quality of the paper they produce. • Each author receives a payoff from his own university (promotion, bonus, teaching load reduction, etc). • Payoffs are non-transferable. TU Games: Ice-Cream Example Three types of ice-cream tubs are for sale: 1 Type 1 (500g) costs $7. 2 Type 2 (750g) costs $9. 3 Type 3 (1000g) costs $11. • n children, each has some amount of money (the i-th child has bi dollars). • Children have utility for ice-cream, and do not care about money. • The payoff of each group: the maximum quantity of ice-cream the members of the group can buy by pooling their money.
    [Show full text]