This course develops the appropriate analysis to study the interactions among rational individuals in a non-cooperative, strategic context.
1 - Risk and uncertainty: preferences under uncertainty, expected utility theory, attitudes towards risk, risk premium, certainty equivalent, the value of information, state dependent utilities.
2 - Market failure: bilateral and multilateral externalities, solutions to externalities (taxes, property rights, emissions markets, Coase theorem); public goods, voluntary contribution and other provision mechanisms.
3 - Game Theory: static and dynamic games, normal and extensive form games, the Nash equilibrium, subgame perfect equilibrium, repeated games, games with asymmetric information.
4 - Imperfect competition: market power, monopoly pricing, static models for oligopoly, repeated interaction, entry.