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University of Texas at Dallas MECO 6345-Advanced Managerial Economics

School of Management Fall 2005

Instructor: Octavian Carare


Office: SOM 3.214
Phone: (972) 883-4770
E-mail: carare@utdallas.edu (best reached by email)
Class website: www.utdallas.edu/~carare/meco6345.html
Office Hours: Tuesday 4 - 6 PM, or by appointment

Course Objectives:

This course is an advanced course in microeconomics. The course will require a good
understanding of multivariate constrained optimization techniques and basic statistics. The main
objective of the course is to provide students with the concepts and techniques of advanced
microeconomics.

Required Readings:

The required course readings include a textbook and a collection of articles. The main textbook is
available from the UTD bookstore and from Off-campus Books. Most of the assigned readings are
available electronically from JSTOR (check the class website for links to the articles).

Main textbook (Text): Advanced Microeconomic Theory by Geoffrey Jehle and Philip
Reny.
Other useful textbooks: Microeconomic Theory by Mas-Colell, Whinston and Greene
Price Theory and Applications, 5th edition, by Steven Landsburg
A Course in Microeconomic Theory by David Kreps

The other textbooks are not required, but you may find it useful to take a look at them. A list of
required readings follows each section of the course.

Course Evaluation:

Best of midterm and final 45%


Worst of midterm and final 35%
Homework 15%
Class participation 5%

Exams:

There will be a midterm and a final examination. The dates of the exams will be announced in
class. Both exams will be three hours in length.

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While the final is not comprehensive, it will require understanding of the topics taught in the first
part of the course. Exams are closed book and closed notes. No makeup exams will be given. A
review session may be scheduled outside of lecture time before the midterm exam if there’s interest
for it.

Policy on scholastic honesty

UT Regents’ regulations regarding scholastic honesty (Regents' Rules and Regulations, Part One,
Chapter VI, Section 3, Subsection 3.2) will be strictly enforced.

Tentative course outline:

Overview and mathematical tools (Text, chapters A1-A2)

Consumer theory (Text chapter 1)


Other readings:
Afriat, S. (1967). The construction of utility functions from expenditure data.
International Economic Review 8 pp. 67-77
Becker, G.S. (1962). Irrational Behavior and Economic Theory. Journal
of Political Economy 70 pp. 1-13
Diamond, Peter and Daniel McFadden (1974), “Some Uses of the
Expenditure Function in Public Finance,” Journal of Public Economics, 3, pp. 3-21.

Production (Text chapter 3)

Choice under uncertainty (handout)


Other readings:
Grether, D. and C.H. Plott (1979). Economic Theory of choice and the
preference reversal phenomenon. American Economic Review 69 pp. 623-38
Rothschild M. and J. Stiglitz (1970). Increasing risk: a definition. Journal of
Economic Theory 2 pp. 225-43\
Rabin, M. and R. Thaler (2000), “Anomalies: Risk Aversion,” Journal of
Economic Perspectives.

Pure exchange and general equilibrium (Text chapter 5)


Other reading
Plott, C.H. (1986). Rational choice in experimental markets. Journal of
Business 59 pp. 301-27

Partial equilibrium (Text chapter 4)


Other readings:
Stigler, G.J. (1982). The Economists and the Problem of Monopoly.
American Economic Review 72 (2) pp. 1-11.
Coase, R. (1972). Durability and monopoly. Journal of Law and
Economics
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Kreps, D.M. and J. Scheinkman (1983) “Quantity precommitment and
Bertrand competition yield Cournot outcomes,” RAND Journal of Economics 14 pp.
326-37
Bulow, J., J. Geanakoplos, and P. Klemperer (1985) “Multimarket
oligopoly: strategic substitutes and complements,” Journal of Political Economy
p. 488.

Information economics (Text chapter 8)


Other readings:
Bernheim, B.D. and M.D. Whinston (1986). Common Agency.
Econometrica 54 pp. 923-42
Holmstrom, B. (1979). Moral hazard and observability. Bell Journal of
Economics 10 pp. 79-91
Holmstrom, B. (1982). Moral hazard in teams. Bell Journal of Economics 13
pp. 324-40
Shavell, S. (1979) Risk Sharing and Incentives in the Principal and Agent
Relationship, Bell Journal of Economics 10, pp. 55-73
Rogerson, W. (1985) The First-order Approach to Principal-Agent Problems,
Econometrica 53, pp 1357-1368
Akerloff, G. (1970). The market for lemons: Quality uncertainty and the
market mechanism. Quarterly Journal of Economics 89, pp. 488-500.
Spence, A.M. (1973). Job market signaling. Quarterly Journal of Economics
87 pp. 355-74

Auctions and mechanism design (Text chapter 9)

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