This is a Master’s course that teaches fundamental microeconomic models and methods. The course is closely related to and complements Microeconomics (within Foundations of Economics) and Game Theory in the curriculum for the Applied Track of the Master’s program in Economics.

We start the course with models of decision making under risk and uncertainty. We will study the representation of preferences under uncertainty (i.e., Expected Utility) and then focus on risk-aversion and its applications. The following part of the course focuses on information economics, which allows for informational asymmetries, giving rise to market inefficiencies. Finally, we will study auction theory. 

By learning the fundamental theories and methods of microeconomics, students will advance their competence in the economic way of thinking and reasoning. In particular, they will

• understand the reasons for the widespread assumption of expected utility maximization (but also its criticism) and explain the reasons behind the demand for insurance and diversification;
• understand the sources and types of inefficiencies arising from informational asymmetries; 
• understand the construction of economic mechanisms and rules to allocate resources under informational asymmetries; and
• be able to analyze real-world microeconomic phenomena and policy with the help of the models and concepts taught.

Students are allowed to be absent for up to two classes.

There will be quizzes, a midterm and a final exam.

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