BSc Mathematics and Economics

Options for Second Year Students in 2010/11

Introduction
This document is intended for current first year students in the BSc Mathematics and Economics
Degree. It is assumed that you have taken the ‘standard’ four units in the first year (Economics
B, Mathematical Methods, Introduction to Abstract Mathematics, and Elementary Statistical
Theory). If this is not the case, then some of the information in this document may not be the
most appropriate for you. Contact your Academic Adviser or the Departmental Tutor in that
case.

When and how

You will be asked to make preliminary option choices for the 2nd year of the degree towards the
end of this Lent Term. In order to help you with this, the Department organises an options
choice meeting in Week 7; an invitation will be sent by e-mail. Your Academic Adviser will
also invite you to discuss your options in a meeting in Weeks 8/9.
It is possible to change your mind later, for instance after you learn about your exam results in
the summer. If you are unsure about the choices you’ve made, discuss the situation and your
options with your Academic Adviser. Your option choices and every later change have to be
approved by your Academic Adviser before they become official.
If you want to do courses outside the standard options, you need the approval of the
Departmental Tutor as well. You should discuss your ideas first with your Academic Adviser
though.
Note that the selection has to be done via “LSE for You” from week 9.

Sources of information
• The major and official source of information is the LSE Calendar, see
http://www.lse.ac.uk/resources/calendar/undergraduate.htm There you can find the degree
structure, course descriptions, and all kind of further regulations.
• The Calendar can give some idea about the contents of the different courses. More extensive
information is available via Departmental web-sites
http://www2.lse.ac.uk/maths/Courses/Undergraduate_Courses for Mathematics courses;
http://econ.lse.ac.uk/courses/ for Economics courses) or in the Public Folders (Public
Folders-- Departments --Statistics for the Statistics courses) and Moodle.
• Your Academic Adviser can tell you more about certain courses (certainly the courses given
by the Mathematics Department).
• If you want to obtain in-depth information about individual courses, then the lecturer
responsible for that course is often the best source. You should be able to talk to her/him
during an office hour.
• And finally, your fellow students, in particular those that are currently 2nd or 3rd year
students in the same degree, can tell you their experiences. Be aware that their stories will be
coloured by their personal interests and background. Also, courses can change from year to
year, teachers change, etc. So don’t just ask what they think of certain courses, but also why
they think that way.
How to decide
There are many reasons why somebody can decide to choose specific options. And most of these
reasons are personal. Here are some points you should think about and which should give you
some guidance what options to go for.
• Personal interest.
Most, if not all, of your options should reflect your personal interests. Make a list for
yourself about what areas in Mathematics, Economics, and maybe Statistics and Finance you
like, and what areas you don’t like. Also, think about the parts in the courses you’ve done so
far that you liked more or less. Then try to match your interests with the courses available.

• Your future career.

If you have some ideas about a career path after the degree, then that should be a very
important influence on your choices. Here are some very general remarks.
ƒ If you are considering a career in a “business-like” environment, including consultancy,
different kinds of banking, etc., then the general rule is to choose a broad selection from
the different topics in Mathematics, Economics and Statistics. A financial course in
addition may be a good idea here as well. Future employers are usually not that interested
in which topics you have done exactly, but like to see that you have good knowledge of
quantitative subjects (which is surely guaranteed in this degree) combined with courses
that show your wider interests and knowledge.
ƒ If you are thinking about doing an MSc (or even a PhD) after this degree, then your
course choice should show some relation to the graduate degree you are planning to do.
Here are some suggestions.
o Those thinking about an MSc in an Economics direction should aim to include as
many Economics options as possible. Both Macroeconomic Principles and
Principles of Econometrics are advisable.
o If you are considering an MSc in a more Financial topic, then you should include
at least one course in Finance, of which Principles of Finance is very suitable.
Also, a further course in Statistics, or Principles of Econometrics, shows that you
will have sufficient background in those areas.
o Some of you may be thinking about an MSc in a more pure Mathematics
direction. Those students should try to do as many Mathematics courses as
possible, using the free options available. A possible follow up to the BSc
Mathematics and Economics is the MSc in Applicable Mathematics and the MSc
in Financial Mathematics at the LSE.

• And finally, there will be plenty of you that don’t have a good idea what they want to do
after their graduation. For those, we can only advise you to make a broad selection,
including some Mathematics, Economics and possibly Finance or Statistics courses, and to
choose courses according to your interests, and possibly your strengths.
The Second and Third Year Options

You will find the degree regulations that apply to you further on in this document. These
regulations incorporate some minor amendments to the degree for next year.

Second Year Options

In what follows it is assumed that you have done the ‘normal’ options in the 1st year. You must
choose 4 units for next year. Be aware that certain choices will influence what you have to do or
can do in the final year.

• You are required to take Microeconomic Principles I or Microeconomic Principles II,

Further Mathematical Methods (Calculus) and Further Mathematical Methods (Linear
Algebra) next year.

• You should also choose a second Economics option. This should be one of Macroeconomic
Principles, Principles of Econometrics or Principles of Finance.
Note that if you decide to follow this last option, then you will have to do one of the
others under Paper 11.

• The fourth paper should be either the combination Real Analysis with one of Optimisation
Theory, Differential Equations, Discrete Mathematics and Algebra and Number Theory, or
any other paper.
If you don’t plan to do the Mathematics combination next year (for which there should be
very strong reasons, as we most definitely do not encourage it), you must do it in the 3rd
year. So if you want to keep as many options as possible open for the 3rd year, it is advisable
to choose the Mathematics option next year.
ƒ The four Mathematics courses mentioned above all deal with mathematical problems and
concepts in a fairly general setting (at times more qualitatively, and so `abstract’), and
can be considered as a follow-up of Introduction to Abstract Mathematics. The
difference between Optimisation Theory, Differential Equations, Discrete Mathematics
and Algebra and Number Theory is mainly in the topics they are dealing with, not in the
approach or standard of rigour of the material.
ƒ In the “Any other paper” option, you can choose a suitable Mathematics, Economics,
Finance or Statistics course mentioned somewhere in the program, but it is also possible
to do a course from the wide selection available at LSE. Not every course is allowed, and
you need permission from both your Academic Adviser and the Departmental Tutor.
Third Year Options
As mentioned earlier, you should think carefully even now about which of the 3rd year options
you may contemplate taking. The general suggestions below should give you an indication of
what can be expected and what is possible.
• Paper 9, Advanced Economic Analysis (if EC210 was taken under paper 7), Political
Economy (if EC210 was taken under paper 7), Econometric Theory (if EC221 was taken
under paper 7) Industrial Economics, Economic Theory and its Applications or Monetary
Economics (if EC210 was taken under paper 7)

• For Paper 10 you need to choose a unit of Mathematics. Exactly which courses are available
can change from year to year. Please note that if you want to do Mathematics of Finance and
Valuation (MA310) then you will also need to take Probability for Finance (MA313) as this
is a required pre-requisite.

• For Paper 11 you need to choose a total of one unit in Mathematics or Economics. Some
courses in Finance are possible as well, unless you’ve done one in the 2nd year. Probability,
Distribution Theory and Inference is another possibility.
Be aware that certain courses available in this paper require pre-requisites that could need
some careful planning. Some details are given in the next Suggested combinations section.

• Paper 12 is intended as a more or less free choice, provided you didn't use this option in the
2nd year. If you didn't do Real Analysis and Optimisation Theory, Differential Equations,
Discrete Mathematics or Algebra and Number Theory in the 2nd year, then you must do
them as Paper 12.
If you already did Real Analysis and Optimisation Theory, Differential Equations, Discrete
Mathematics or Algebra and Number Theory in the 2nd year, then for Paper 12 you can
choose almost any course available at the LSE (within reason, and with departmental
approval.). For those who want to do more Mathematics or Economics, they can choose
more from Papers 10 or 11.

Apart from these options, it may be possible to do another course available from within the LSE
(or even from one of the other Colleges of the University of London).
If an alternative choice fits within the overall philosophy of the Mathematics and Economics
Degree, then a so-called “Suspension of Regulations” can be given. In order to be given such a
suspension, you need permission from both your Academic Adviser and the Departmental Tutor.
It’s a good idea to discuss your ideas with your Academic Adviser first, before you take any
further action in this direction.
Suggested combinations
In general you can make any combination of the choices mentioned above. But certain 3rd year
courses have prerequisites. Also, some combinations are more advisable than others, in the sense
that they form a more coherent package, or are suitable for those with particular interests.
• If you are interested in following: Advanced Economic Analysis, or Monetary Economics in
year 3, then you should do Macroeconomic Principles in the 2nd year.

• Students who want to do Econometric Theory in the 3rd year, should do Principles of
Econometrics.

• The 3rd year course Quantitative Finance can be done with just Microeconomic Principles II
as pre-requisite. Nevertheless, it is a good idea to do Principles of Econometrics in your 2nd
year as well.

• Those with a clear interest in Mathematics can maximise the number of Mathematics courses
by taking Mathematics in Papers 10, 11 and 12.

February 2010 - Adam Ostaszewski - Departmental Tutor, Mathematics Department

 New Degree Regulations BSc Mathematics and Economics
Year 1
1 EC102 Economics B
2 MA100 Mathematical Methods
3 ST102 Elementary Statistical Theory
4 MA103 Introduction to Abstract Mathematics
Year 2
5 EC201 Microeconomic Principles I or EC202 Microeconomic Principles II
6 MA200 Further Mathematical Methods (Calculus) (H) and MA201 Further Mathematical Methods (Linear
Algebra) (H)
7 EC210 Macroeconomic Principles or EC221 Principles of Econometrics or FM212 Principles of Finance
8 (a) MA203 Real Analysis (H) and one of (i) MA208 Optimisation Theory (H) or (ii) MA209 Differential
Equations (H) or (iii) MA210 Discrete Mathematics (H) or (iv) MA211 Algebra and Number Theory (H) (new
in 2010/1)
Or (b) Any other paper approved by the Dept Tutor
Year 3
9 EC301 Advanced Economic Analysis (if EC210 was taken under paper 7)
EC302 Political Economy (if EC210 was taken under paper 7)
EC309 Econometric Theory (if EC221 was taken under paper 7)
EC313 Industrial Economics
EC319 Economic Theory and its Applications
EC321 Monetary Economics (if EC210 was taken under paper 7)
10 Courses to the value of one unit from the following, but at most one of MA2** can be taken:
MA208 Optimisation Theory (H) (if not taken under paper 8 or paper 12)
MA209 Differential Equations (H) (if not taken under paper 8 or paper 12)
MA210 Discrete Mathematics (H) (if not taken under paper 8 or paper 12)
MA211 Algebra and Number Theory (H) (new in 2010/1) (not to be taken with MA315)
MA301 Game Theory I (H) (not to be taken with MA300 under paper 11)
MA303 Chaos in Dynamical Systems (H)
MA305 Optimisation in Function Spaces (H)
MA310 Mathematics of Finance and Valuation (H)
MA313 Probability for Finance (H)
MA314 Theory of Algorithms (H)
MA315 Algebra and its Applications (H)
MA316 Graph Theory (H)
MA317 Complex Analysis (H) (new in 2010/1)
11 If FM212 was taken as paper 7 then:
Either EC210 Macroeconomic Principles or EC221 Principles of Econometrics
If EC210 or EC221 was taken under paper 7 then one from:
EC210 Macroeconomic Principles
EC221 Principles of Econometrics
MA300 Game Theory (not to be taken with MA301)
FM212 Principles of Finance
FM320 Quantitative Finance
ST202 Probability, Distribution Theory and Inference
Another 3rd year paper in Mathematics or Economics with the approval of the Dept Tutor
12 If option (b) was taken under paper 8 then:
MA203 Real Analysis (H) and one of MA208 Optimisation Theory (H) or MA209 Differential Equations (H)
or MA210 Discrete Mathematics (H) or MA211 Algebra and Number Theory (new in 2010/1) (not to be taken
with MA315) If option (a) was taken under paper 8 then:
A further paper to the value of one unit from papers 10 and 11
Any other paper approved by the Dept Tutor
(H) = half-unit
 BSc Mathematics with Economics
BSc Mathematics with Economics is a new degree starting next year. The Regulations are
included below. Entry to the second year is possible for students who have followed the first
year of the Mathematics and Economics degree; anyone interested is encouraged to consult their
Academic Adviser or Departmental Tutor.

Degree Regulations BSc Mathematics with Economics

Year 1
1 EC102 Economics B
2 MA100 Mathematical Methods
3 ST102 Elementary Statistical Theory
4 MA103 Introduction to Abstract Mathematics
Year 2
5 Either EC201 Microeconomic Principles I or EC202 Microeconomic Principles II
6 MA200 Further Mathematical Methods (Calculus) (H) and MA201 Further Mathematical
Methods (Linear Algebra) (H)
7 MA203 Real Analysis (H)
8 Courses to the value of 1.5 units from:
MA208 Optimisation Theory (H)
MA209 Differential Equations (H)
MA210 Discrete Mathematics (H)
MA211 Algebra and Number Theory (H)
ST202 Probability, Distribution Theory and Inference
Year 3
9 EC210 Macroeconomic Principles or
EC221 Principles of Econometrics or
EC319 Economic Theory and its Applications
10 & Courses to the value of two units from the following (no more than one MA2** course and
11 no more than two of the listed ST courses can be be taken):
MA208 Optimisation Theory (H) (if not taken under 8)
MA209 Differential Equations (H) (if not taken under 8)
MA210 Discrete Mathematics (H) (if not taken under 8)
MA211 Algebra and Number Theory (H) (if not taken under 8)
MA300 Game Theory
MA301 Game Theory I (H)
MA303 Chaos in Dynamical Systems (H)
MA305 Optimisation in Function Spaces (H)
MA310 Mathematics of Finance and Valuation (H)
MA313 Probability for Finance (H)
MA314 Theory of Algorithms (H)
MA315 Algebra and its Applications (H)
MA316 Graph Theory (H)
MA317 Complex Analysis (H)
ST300 Regression and Generalised Linear Models (H)
ST302 Stochastic Processes (H)
ST304 Time Series and Forecasting (H)
ST308 Bayesian Inference (H)

12 Any other paper approved by the Dept Tutor.

 Changes to EC319 for 2010

EC319 Economic Theory and its Applications

This information is for the 2010/11 session.

Teachers responsible Dr R Razin, S480 and Dr F Nava, S482

Availability This course is optional for BSc Mathematics and Economics, BSc Mathematics
with Economics, BSc Economics, BSc Econometrics and Economic Theory and its
Applications, BSc Philosophy and Economics, BSc Social Policy and Economics and MSc
Econometrics and Economic Theory and its Applications (Two Year Programme).

Pre-requisites Students should have completed Microeconomic Principles I or II (or

equivalent). Fluency in calculus is essential, some knowledge of analysis, linear algebra and set
theory. A highly motivated student with a less technical background could do the course, if he or
she finds handling economics mathematically comes naturally. Any such student should see Dr
Razin before the course starts.

Course content This course reviews fundamental concepts in Economic theory and presents
some of its most successful applications. The first part of the course will introduce the student to
the field of cooperative/coalitional game theory and to models of bargaining. A special emphasis
of this part will be to connect between cooperative and non-cooperative approaches. After
setting up the primitives of the coalitional game theory framework, different solution concepts
like the core, the strong core and farsightedness are going to be studied with an emphasis on
applications such as exchange economies. The relation between cooperative and non-
cooperative approaches to coalition formation will be discussed. In studying models of
bargaining, both axiomatic and non-cooperative approaches will be examined, such as Nash’s
axiomatic approach, the Rubinstein-Stahl model and the Baron-Ferejohn model of legislative
bargaining.
The second part of the course consists of an introduction to Auction Theory. It presents standard
auction formats and discusses strategic behaviour in such environments. Auctions will be
analyzed both in private and interdependent value environments. Fundamental topics such as the
revenue equivalence theorem, the optimal auction design problem and the linkage principle will
be discussed extensively. Throughout the course we will consider departures from the standard
model allowing for heterogeneity amongst players, budget constraints, resale. The focus of the
course is mainly theoretical, but when possible empirical and experimental evidence supporting
the formal models will be discussed with references to relevant work in the field.

Teaching Lectures EC319: 20 MT and LT. Classes EC319.A: 20 Sessional.

Formative coursework Students are urged to attempt the assigned problems before attending
classes. At least four pieces of written work will be required.

Indicative reading M. Osborne, An Introduction to Game Theory, Oxford University Press,

2003. D. Ray, A Game-Theoretic Perspective on Coalition Formation, Oxford University Press,
2007. V. Krishna, Auction Theory, Academic Press, 2002.

Assessment A three-hour written examination in the ST.

 New Mathematics Courses for 2010

MA211 Algebra and Number Theory (Half unit)

Teacher responsible Professor M Anthony

Availability BSc Mathematics and Economics, BSc Business Mathematics and Statistics and BSc
Mathematics with Economics.

Pre-requisites MA100 Mathematical Methods; MA103 Introduction to Abstract Mathematics

Course content Congruences; review of basic group theory; groups of permutations; homomorphisms
and normal subgroups; rings and fields; examples, including polynomial rings, matrix rings, and number
rings; ideals and ring homomorphisms; Euclidean rings and unique factorisation; applications to number
theory.

Teaching 20 hours of lectures and 10 hours of classes in the MT.

Formative coursework Weekly exercises will be set and marked.

Indicative reading Introduction to Algebra, Peter J Cameron (OUP 1988);

Rings, Fields and Groups: Introduction to Abstract Algebra, Reg Allenby (Butterworth-Heinemann, 2nd
edition 1991).

Assessment Unseen two hour examination in the ST (100%).

MA317 Complex Analysis (Half unit)

Teacher responsible: TBA

Availability: BSc Mathematics & Economics and BSc Mathematics with Economics and any students
who satisfy the pre-requisites.

Pre-requisites:
Solid grounding in mathematics, especially analysis, in particular MA203 Real Analysis.

Course content:
The course will cover the fundamental concepts and methods in complex analysis. The basic object of
study in the course will be a complex differentiable function in a region, and the far-reaching
consequences of the notion complex differentiability will be dealt with in the course. The specific topics
that will be covered are: the geometry of complex numbers, complex differentiation, Cauchy-Riemann
equations, Cauchy’s integral theorem, Cauchy’s integral formula, Taylor series. The core results will be
illustrated with computational examples and applications.

Teaching: 20 hours of lectures and 10 hours of classes in the MT

Formative coursework: Weekly exercises will be set and marked.

Indicative reading: S.D. Fisher. Complex Variables. Corrected reprint of the second (1990) edition,
Dover Publications, Inc., Mineola, NY, 1999. J.E. Marsden and M.J. Hoffman. Basic Complex Analysis.
Second edition, W. H. Freeman and Company, New York, 1987. D.O. Tall. Functions of a Complex
Variable. Routledge and Kegan Paul, London, 1985.

Assessment: Unseen two hour examination in the ST (100%).