Dr Andrew Ellis SAL 3.15

Dr Christopher Sandmann SAL.4.24

This course is available on the BSc in Econometrics and Mathematical Economics, BSc in Economics, BSc in Mathematics and Economics, BSc in Mathematics with Economics, BSc in Mathematics, Statistics and Business and BSc in Philosophy and Economics. This course is available with permission as an outside option to students on other programmes where regulations permit. This course is not available to General Course students.

Students must have completed Microeconomic Principles I (EC201) or Microeconomic Principles II (EC202) or Microeconomics II (EC2A1) or Microeconomics II (EC2A3), or equivalent.  Fluency in calculus is essential, and some knowledge of analysis, probability theory, linear algebra and set theory is advantageous.

This course reviews fundamental concepts in economic theory and presents some of its most successful applications. The first part of the course will survey concepts in non-cooperative game theory and will introduce students to game theoretic modelling in economics. After setting up the primitives of the game theory framework, different solution concepts will be analysed with an emphasis on economic applications including bargaining, voting, communication, and matching. The second part of the course consists of an introduction to auction theory. Auctions have been widely used to allocate spectrum licenses, drilling rights or central bank lending against collateral; their design is therefore of immediate practical concern. The theory, drawing on mechanism design, allows us to analyse what makes auctions desirable, how different formats compare, and tackle issues such as strategic entry, collusive behaviour, or allocative externalities. Our treatment will be mostly theoretical and cover fundamental issues, most importantly the revenue equivalence theorem. From here we will embark on an eclectic tour, covering issues relating to competition policy and auction design, and exploring connections with competitive markets and nonlinear pricing.

15 hours of lectures and 10 hours of classes in the AT. 15 hours of lectures and 9 hours of classes in the WT. 1 hour of classes in the ST.

There will be a reading week in Week 6 of WT (no lectures or classes that week).

This course is delivered through a combination of classes and lectures totalling a minimum of 50 hours across Autumn Term, Winter Term and Spring Term.  

Students are expected to attempt assigned problem sets ahead of the class, where these will be discussed. In addition, students are expected to submit up to four of the designated hand-in problem sets, two for each term, to receive feedback from class teachers.

M. Osborne, An Introduction to Game Theory, Oxford University Press, 2003.

P. Milgrom, Putting Auction Theory to Work, Cambridge, 2004

Other sources include:

V. Krishna, Auction Theory, Academic Press, 2009. 

Exam (100%, duration: 3 hours, reading time: 15 minutes) in the spring exam period.