Graduate Level Advanced Microeconomics
Department of Applied Economics, Guanghua School of Management, Peking University

2008 Class Resource Site

Instructor: Benjamin Chiao
Teaching Assistants: Xu Xin, Sun Ning

Course Syllabus: [Download PDF]

Lecture 14 (Dec 31, 2008): Debates

No required readings.

Lecture 13 (Dec 24, 2008): General Equilibrium with Uncertainty

1. Notes for lectures 12 and 13 are posted here and here and Blackboard.. One more typo corrected for lecture 12 (thanks to Stella Yang). On slide 32, risk lover and risk averser were reversed before.

2. No specific topics for online discussions.

3. Voting outcomes: posted on blackboard.

Lecture 12 (Dec 17, 2008): Information, Risk and Uncertainty

0. Lecture notes have been posted here and on Blackboard. Notes: Typos corrected on p.28 (changed to: premium is bigger) and p.38 (changed to: watching a movie)

1. Homework: MWG 6.B.1 6.B.2 6.C.1 6.C.3 6.C.6 6.C.7 6.C.8 6.C.15 6.C.17
6.D.2

2. Online discussion: No specific topics.

3. Voting results. To be announced later.

Lecture 11 (Dec 10, 2008): General Equilibrium Part II (Examples)

0. Lecture notes have been posted here and on Blackboard

1. Homework

The scores of this homework are relative. The best performing group gets 100, the second 99, and so on.

Q1 If you have spent reasonable time on this course, you should have the ability to tackle most homework and exam questions of a similar course in any world-class universities. How do you know that it's true? One way to find out is to check it out yourself. Many of you still do not have a habit to access the World Wide Web. Those people are missing a whole lot in life. If there is anything that differentiates this course from other similar courses, it is the emphasis of your liberty to choose what to do in some of your submitted works. In this exercise, you are asked to search online for a general equilibrium question and answer it. The question could be a homework or exam question from a world-class university outside China. State clearly which institution/department and the url you obtain the question. It is fine if there are answers already available there. The presenting groups of this homework will present the works of the highest scoring homeworks.

Q2 Use no more than 500 Chinese or English words to describe what you have learned directly and indirectly in the search exercise in Q1.

Q3 Please submit one debate proposition. Some submitted propositions will be allocated to each pair of groups for our use in the last lecture.

2. Voting Results

Already posted on Blackboard.

3. Online Discussion.

No specific themes

4. Preparation for the Next Lecture

Please read MWG Ch. 6

Lecture 10 (Dec 3, 2008): General Equilibrium Part I

We have covered Ch. 15A-C (briefly) and Ch. 16A to D (in details), and ran a double oral auction experiment.

1. Lecture notes have been posted here and on Blackboard

2. Online discussion. The format of the mid-term and the contents of Questions 2 to 4.

3. Logistics arrangement for the remaining lab sessions, presentations, oral exams and meetings with instructors have been posted here.

4. Homework questions

Q1: 15.B.1
Q2: 15.B.2
Q3: 15.B.3
Q4: 15.C.2
Q5: 16.C.1
Q6: 16.C.2
Q7: 16.C.3
Q8: 16.D.1
Q9: 16.D.2
Q10: 16.D.3

Lecture 9 (Nov 26, 2008): Classical Demand Theory Part 3 (Welfare)

Lecture notes and the mid-term exam have been posted here and Blackboard. Note: For question 3, the reference of 经济解释 should be Ch 5 需求定律 not Ch 4 功用的理念. You may also draw on other chapters in 经济解释. Question 1 precludes materials you have submitted as a group in your homework. But you could build on that to come up with something that is reasonably different.

Please read MWG Ch3 Section I, Cheung's 经济解释 Book 1 Ch5, and Friedman (Dec 1949): "The Marshallian Demand Curve.'' Journal of Political Economy (this paper is now on Blackboard).

There will be no lab sessions on Nov 29 and Nov 30 because there is no homework this week for Lecture 9. Instead, the TAs have offered to set up extra office hours: Nov 24 (2pm-4pm) and Nov 25 (2pm-4pm) at Guanghua library (3/F old building).

The mid-term will be distributed on Wed (Nov 26) or Thu (Nov 27). In the midterm, each question will be scored from 0-100, you are allowed to decide how much weight each question should carry, with the summation of weights equals to 1. There is a minimum score you need to set for each question.

Lecture 8 (Nov 19, 2008): Classical Demand Theory Part 2

1. Lecture notes have been posted here and on Blackboard

2. Online discussion. No specific topics.

3. In the midterm, each question will be scored from 0-100, you are allowed to decide how much weight each question should carry, with the summation of weights equals to 1. There is a minimum score you need to set for each question.

4. Homework questions:

Q1 Prove that the Hicksian Wealth Compensation is strictly smaller than the Slutsky Wealth Compensation for discrete changes.
Q2 Prove that the last inequality on p.22 of the lecture notes holds.
Q3. Prove that x(p,w) is an ordinal concept by v(p,w) is not. Interpret its connection with the need to normalize by the marginal utility of wealth as in the Roy's Identity.
Q4 Ex. 3.G.1
Q5 Ex. 3.G.2
Q6 Ex. 3.G.3
Q7 Ex. 3.G.7
Q8 Ex. 3.G.11
Q9. Ex. 3.J.1
Q10 Ex. 4.B.1
Q11. Ex. 4.C.3
Q12. Analyse Cheung's claim that Giffen goods can't exist in the market.

Lecture 7 (Nov 12, 2008): Classical Demand Theory Part 1

Read MWG Ch. 3A-3E.

1. There will be no suggested theme for online discussion this week.

2. Lectures notes have been posted here and on Blackboard.

3. Homework questions for this week:

Q1 Ex. 3.B.1
Q2 Ex. 3.B.2 I modified my lecture notes (7pm version today) to
incorporate weak monotonicity defined in this exercise. Also, prove or
disprove that monotonicity implies weak monotonicity. Note: It looks
like a few other books rely on just weak monotonicity and strong
monotonicities to arrive at most of the results in this book.
Q3 Ex. 3.C.6
Q4 Ex. 3.D.1
Q5 Ex. 3.D.2
Q6 Ex. 3.D.4
Q7 Ex. 3.D.5
Q8 Ex. 3.D.6
Q9 Ex. 3.D.7
Q10 Ex. 3.E.1
Q11 Ex. 3.E.2
Q12 Ex. 3.E.7
Q14 Prove that the Walrasian budget set is closed and bounded.

Optional
Q13 Ex. 3.C.2
Q15 3.C.3

Lecture 6 (Nov 5, 2008): Consumers

The topic for this lecture is mainly from Ch.2 of MWG. All students should read the whole chapter before class.

1. The lecture notes have been posted here and on Blackboard.

2. There are no suggested themes for online discussion this week.

3. HW questions for this week are:
Q1 MWG EX. 2.D.3
Q2 MWG EX. 2.E.1
Q3 MWG EX. 2.E.2
Q4 MWG EX. 2.E.3
Q5 MWG EX. 2.E.4
Q6 MWG EX. 2.F.1
Q7 MWG EX. 2.F.2
Q8 MWG EX. 2.F.3
Q9 MWG EX. 2.F.7
Q10 MWG EX. 2.F.11
Q11 MWG EX. 2.F.12
Q12 MWG EX. 2.F.14

Lecture 5 (Oct 29, 2008): Firms

All students should read MWG Ch. 5 before class. Note that I have updated the course syllabus. Changes made include the inclusion of office hours and venues, update of the tentative course schedule.

1. The lectures notes have been posted on Blackboard and here.

2. The HW questions for this week are:

Q1 MWG 5.B.1
Q2 MWG 5.B.2
Q3 MWG 5.B.3
Q4 MWG 5.C.1
Q5 MWG 5.C.2
Q6 MWG 5.C.5
Q7 MWG 5.C.9
Q8 MWG 5.C.10
Q9 MWG 5.C.12
Q10 MWG 5.D.1
Q11 MWG 5.D.2
Q12 MWG 5.F.1

Optional (will be graded but without scores)

Q13 MWG 5.B.1
Q14 MWG 5.B.6
Q15 MWG 5.C.3
Q16 MWG 5.C.4
Q17 MWG 5.C.11
Q18 MWG 5.D.3
Q19 MWG 5.E.1

3. The suggested theme for online discussion this week is the Coase Theorem. Any other topics are also welcome.

Lecture 4 (Oct 22, 2008): Transaction Costs and Preview of Game Theory

Lecture notes have been posted on course.pku.edu.cn

Homework 4: Due Lecture 5 (Oct 29, 2008) 9:10am. No late submission.

Q1. Write a two-page critique to contrast the viewpoints between these two articles:

Paper 1: Robert Aumann, "What Is Game Theory Trying to Accomplish?," in Frontiers of Economics, edited by K. Arrow and S. Honkapohja, Basil Blackwell, Oxford, 1985, pp. 28-76. At http://www.ma.huji.ac.il/~raumann/pdf/what is game theory.pdf

Paper 2: Steven Cheung (2001), "博弈理论的争议" at http://blog.sina.com.cn/s/blog_47841af7010005c2.html

Q2. This is perhaps the best interpretation of the Coase Theorem: Steven Cheung, 《经济解释》卷三《制度的选择》第一章：高斯定律. Write a one-page critique on this chapter (you may use Chinese for this critique). There used to be downloadable chapters on Cheung's official website: http://blog.sina.com.cn/s/blog_47841af701000627.html You should still be able to download the electronic version elsewhere on the Internet. Note: I have posted one version of it to course.pku.edu.cn. Thanks Li Xing for sending me the file.

Additional Task (if you are the presenting groups): During the lab session, first present your own critique, then consolidate views from the audience. Send the consolidation to the teaching assistant and instructor within 48 hours after the first lab session ended. The consolidation will then be posted here. Write clearly what were agreed on, disagreed on, and unresolved by the students of your lab session.

Lecture 3 (Oct 15, 2008): Preference and Social Choice

Lecture notes are accessible here and on http://course.pku.edu.cn. If you understood the materials in the lecture notes of this particular week, the relevant class discussion and homework problems, you can safely skip reading Ch. 21 of Mas-Colell, Whinston and Green (1995) for the purpose of homeworks and exams.Sections 21.D and 21.E. will not be in exams. PhD-oriented students are strongly advised to read the whole chapter, however.

Homework 3: Due Lecture 4 (Oct 22, 2008) 9:10am. No late submission.

Q1 MWG 21.B.1
Q2 MWG 21.B.2
Q3 MWG 21.C.1
Q4 MWG 21.C.2
Q5 MWG 21.C.3
Q6 Professional academic organizations have started to adopt approval voting rather than majority voting. Use one page to summarize without proving anything the discussion on approval voting using materials on this page: http://en.wikipedia.org/wiki/Approval_voting

Optional (will be graded but without scores):
Q101 MWG 21.D.2
Q102 MWG 21.D.3
Q103 MWG 21.D.4
Q104 MWG 21.D.5
Q105 MWG 21.D.12

Online Discussion Scope: Due to the lack of activities for last week's discussion, we are merging the time for these two weeks's discussion. Discussion for this week has started and will end on Oct 22, 2008 (Wed) 9am. Voting will be done in class. Discuss what views you think have been agreed on or disagreed on by Hayek, Friedman, Buchanan, Arrow, Sen, Becker, etc for the general notion of democracy.

Lecture 2 (Oct 8, 2008): Preference and Individual Choice

Lecture notes are accessible here and on http://course.pku.edu.cn. If you understood the materials in the lecture notes of this particular week, the relevant class discussion and homework problems,, you can safely skip reading Ch. 1 of Mas-Colell, Whinston and Green (1995) for the purpose of homeworks and exams. PhD-oriented students are strongly advised to read the whole chapter, however.

Homework 2: Due Lecture 3 (Oct 15, 2008) 9:10am. No late submission.
Q1 MWG 1.B.1
Q2 MWG 1.B.2
Q3A MWG 1.B.3
Q3B MWG 1.B.4
Q4 MWG 1.B.5
Q5 MWG 1.C.1
Q6A MWG 1.C.2
Q6B MWG 1.D.1
Q7 MWG 1.D.2
Q8 MWG Prove uniquess of a preference relation (see the last page of lecture notes)
Q9 MWG 1.D.3
Q10 MWG 1.D.4

Online Discussion Scope: Merged with online discussion in lecture 3.

Lecture 1 (Sep 24, 2008): Philosophy of Science

Homework 1: Due Lecture 2 (Oct 8, 2008) 9am. No late submission. As a group, write a two-page critique in English for the following required readings:
----1. Ernest Nagel, "Assumptions in Economic Theory," American Economic Review, May 1963.
----2. Online excerpt of Karl Popper's book Science: Conjectures and Refutations. URL:
http://cla.calpoly.edu/~fotoole/321.1/popper.html

Optional Readings:
---3. Milton Friedman, "The Methodology of Positive Economics," Essays in Positive Economics (Chicago, 1953).
---4. Armen Alchian, "Uncertainty, Evolution and Economic Theory," Journal of Political Economy, June 1950.

Additional Task (if you are groups 1 and 2): During the first lab session, first present your own critique, then consolidate views from the audience. Send the consolidation to the teaching assistant and instructor within 48 hours after the first lab session ended. The consolidation will then be posted here. Write clearly what were agreed on, disagreed on, and unresolved by the students of your lab session.

Online Discussion Scope: Before Oct 8, 2008 9am, raise or entertain questions pertaining to articles 1 and 2 above. See the course syllabus for instructions on how to subscribe to the mailing lists. Note: If you were born on an even date (e.g. Oct 2, Jan 4), you are in Discussion Group A. Else, it's B. You may use English or Chinese in the discussion.