Microeconomic Theory

Part I: Individual Decision-Making Introduction to Part I 1. Preference and Choice A. Introduction B. Preference Relations C. Choice Rules D. The Relationship between Preference Relations and Choice Rules Exercises 2. Consumer Choice A. Introduction B. Commodities C. The Consumption Set D. Competitive Budgets E. Demand Functions and Comparartive Statics F. The Weak Axiom of Revealed Preference and the Law of Demand Exercises 3. Classical Demand Theory A. Introduction B. Preference Relations: Basic Properties C. Preference and Utility D. The Utility Maximization Problem E. The Expenditure Minimization Problem F. Duality: A Mathematical Introduction G. Relationships between Demand, Indirect Utility, and Expenditure Functions H. Integrability I. Welfare Evaluation of Economic Changes J. The Strong Axiom of Revealed Preference Appendix: Continuity and Differentiability Properties of Walrasian Demand Exercises 4. Aggregate Demand A. Introduction B. Aggregate Demand and Aggregate Wealth C. Aggregate Demand and the Weak Axiom D. Aggregate Demand and the Existence of a Representative Consumer Appendix: Regularizing Effects of Aggregation Exercises 5. Production A. Introduction B. Production Sets C. Profit Maximization and Cost Minimization D. The Geometry of Cost and Supply in the Single Output Case E. Aggregation F. Efficient Production G. Remarks on the Objectives of the Firm Appendix: The Linear Activity Model Exercises 6. Choice under Uncertainty A. Introduction B. Expected Utility Theory C. Money Lotteries and Risk Aversion D. Comparison of Payoff Distributions in Terms of Return and Risk E. State Dependent Utility F. Subjective Probability Theory Exercises Part II: Game Theory Introduction to Part II 7. Basic Elements of Non-Cooperative Games A. Introduction B. What is a Game? C. The Extensive Form Representation of a Game D. Strategies and the Normal Form Representation of a Game E. Randomized Choices Exercises 8. Simultaneous-Move Games A. Introduction B. Dominant and Dominated Strategies C. Rationalizable Strategies D. Nash Equilibrium E. Games of Incomplete Information: Bayesian Nash Equilibrium F. The Possibility of Mistakes: Trembling-Hand Perfection Appendix: Existence of Nash Equilibrium Exercises 9. Dynamic Games A. Introduction B. Sequential Rationality, Backwards Induction, and Subgame Perfection C. Sequential Rationality and Out-of-Equilibrium Beliefs D. Reasonable Beliefs, Forward Induction, and Normal Form Refinements Appendix A: Finite and Infinite Horizon Bilateral Bargaining Appendix B: Extensive Form Trembling-Hand Perfection Exercises Part III: Market Equilibrium and Market Failure Introduction to Part III 10. Competitive Markets A. Introduction B. Pareto Optimality and Competitive Equilibria C. Partial Equilibrium Competitive Analysis D. The Fundamental Welfare Theorems in a Partial Equilibrium Context E. Welfare Analysis in the Partial Equilibrium Model F. Free-Entry and Long-Run Competitive Equilibria G. Concluding Remarks on Partial Equilibrium Analysis Exercises 11. Externalities and Public Goods A. Introduction B. A Simple Bilateral Externality C. Public Goods D. Multilateral Externalities E. Private Information and Second-Best Solutions Appendix: Non-Convexities and the Theory of Externalities Exercises 12. Market Power A. Introduction B. Monopoly Pricing C. Static Models of Oligopoly D. Repeated Interaction E. Entry F. The Competitive Limit G. Strategic Precommitments to Affect Future Competition Appendix A: Infinitely Repeated Games and the Folk Theorem Appendix B: Strategic En

This is a comprehensive textbook covering all the topics taught in the graduate-level, two-semester course in microeconomic theorry required of all graduate students of economics. It combines the results of the authors' experience of teaching microeconomics at Harvard and has been fully classroom tested.