Microeconomics

Module description

Summary:

In this Microeconomics module.  We will learn and use maths and rigorous logic to consider deep questions of …

- individual preferences, choices and optimization subject to constraints; how individuals interact with one another, and the consequences of this
- firms’ profit-maximising choices and the implications of these for society (how much value is created, who gets what, how do we consider these outcomes as a society)
- psychological influences on the above, and limits to optimisation.

This is a selective and bespoke module. We will focus on a limited set of concepts, models and applications. We will aim to incorporate material that is particularly relevant to your careers and your research interests.

This is an inquisitive module: we ask ‘the 'how?', 'why?', 'so what?', and 'is this reasonable?' ... of the models and concepts.

Additional Information:

Internationalisation

This is a basic and applied theory course, but the content is applicable in every country. The examples used in this module can be applied to any firm or decision.

Sustainability

All of the resources for this module are available on the ELE (Exeter Learning Environment).

Full module specification

Module aims

ILO: Module-specific skills

• 1. consider issues choice, decision, strategy, and welfare logically and precisely
• 2. represent the key ingredients of microeconomic problems in the form of tractable models
• 3. solve the models
• 4. derive testable implications of the models
• 5. critically discuss the adequacy of the models
• 6. consider the relevance, application, and empirical implications/assessment of the models

ILO: Discipline-specific skills

• 7. apply economic reasoning to decision problems
• 8. use economic analysis to construct explanations for observed economic actions
• 9. explain the nature of incentives, game theory and opportunity costs, as well as behavioural consideratinos, in decision-making

ILO: Personal and key skills

• 10. engage in abstract thinking, extracting essential features of complex systems to facilitate problem solving and decision-making
• 11. engage in deductive and inductive reasoning to enhance problem solving and decision-making skills
• 12. plan and manage their time effectively in relation to deadlines
• 13. demonstrate logical argument, analyse and interpret data and evaluate alternative perspectives on the basis of objective reasoning
• 14. communicate and present complex arguments in oral and written form with clarity and succinctness

Learning activities and teaching methods (given in hours of study time)

Details of learning activities and teaching methods

Formative assessment

Summative assessment (% of credit)

Details of summative assessment

Details of re-assessment (where required by referral or deferral)

Syllabus plan

We will first cover basic Economic (and behavioural) models of individual preferences and ‘choices subject to constraints’. We will treat this rigorously and abstractly/mathematically. At the same time, we will consider the applications of this, and aim at an intuitive and logical understanding of the assumptions and how the parts fit together. We will particularly focus on decision-making under uncertainty, and its implications for Finance. The model of preferences and optimization leads to consumer and market demand and its properties.  Next we focus how (especially monopoly) firms consider consumer demand in making (especially pricing and market segmentation) decisions to maximise profit. Time-permitting, we will consider evidence on how firms actually make these choices, and relevant ‘data science/Econometric’ tools.

There will be a mid-term examination/assessment at approximately this point in the module.

‘Outcomes we care about’ don't only depend on what we choose, but on what others' choose. We next consider choices and outcomes in such strategic settings, using the tools and language of Game Theory (and, time-permitting, mechanism design and the ‘Principal-Agent’ model). We will also consider evidence (from the real world and from ‘laboratory experiments’) on decision-making in strategic settings.

We consider Psychology, heuristics/biases, and bounded rationality throughout the module. For the final topic, we focus on several additional models (and evidence) from Behavioural Economics (considering topics such as time-inconsistent, reference-dependent, and other-regarding preferences/choices).

In the last week of the module (and before), we will discuss the final project, which will involve building and incorporating Economic model(s) into an applied or research topic.

An indicative weekly plan is given in the outline of the module (and the main ‘web book’ for the module) linked HERE (https://daaronr.github.io/micro-giving-pub/outline.html).

Indicative learning resources - Basic reading

David Reinstein’s web book “Microeconomics – MSc” available at https://daaronr.github.io/micro-giving-pub/outline.html

This will incorporate and link material from other texts (mostly open-source and free) as well as academic articles (as well as popular/professional content.)

-       A key text used is “Models in Microeconomic Theory”, by Osborne and Rubinstein (free at https://www.openbookpublishers.com/product/1171).

Other resources include:

-      “Introduction to Economic Analysis”, by Preston McAfee, Caltech and Tracy Lewis, Duke University, available at https://open.umn.edu/opentextbooks/BookDetail.aspx?bookId=47

-      “Quantum Microeconomics with Calculus” by Yoram Baumann (http://www.smallparty.org/yoram/quantum/quantumcalc.pdf)

-       Varian, Hal R., Intermediate microeconomics: a modern approach. New York, NY: WW Norton & Company, 2010.

-       "Intermediate Microeconomics and Its Application" (12th ed.), by Walter Nicholson and Christopher M. Snyder, Cengage Learning, available for free access at www.vlebooks.com

-       Academic articles linked within the web-book

Module has an active ELE page?

Yes

Indicative learning resources - Web based and electronic resources

ELE – http://vle.exeter.ac.uk/course/view.php?id=192

Origin date

16/07/2014

Last revision date

16/09/2020