Microeconomics 3

NEW!!! The new date for the February exam is Friday 10, at 2 p.m.

Results of the written exam (21/12/2011) are available here.

Fall term (from November 10 to December 15)
Lectures of “Micro 3” take place in piazza Scaravilli 2, on Thursday and on Friday from 9 to 12. Click here to see where lectures take place.

Lecturer
Francesca Barigozzi
E-mail: francesca.barigozzi@unibo.it
Office hours, third floor (p.zza Scaravilli 1):
See here: http://www2.dse.unibo.it/barigozzi/corsi/corsi.htm
Note: office hours are for the purpose of addressing questions relating to the course. I will not deal with those over e-mail

Teaching assistant
Matteo Maria Cati
E-mail: matteomaria.cati@unibo.it
Office hours: see here http://www.moodle.unibo.it/course/category.php?id=171

Contents and purpose of the course
The purpose of this course is to introduce students to an analytical and in-depth study of market failures and to treat some of the main topics in the field of information economics. After a brief introduction to the Fundamental Theorems of Welfare Economics and their implications, a formal analysis of main market failures is provided: externalities, public goods, and information asymmetries will be analyzed. Particular attention will be devoted to topics related to information economics: principal-agent models, moral hazard, adverse selection (signaling and screening).

Main readings
Suggested readings for this course are:
- Externalities and public goods: Varian, H., Microeconomic Analysis, III ed., Norton, 1992, chaps 23 and 24.
- The market for lemons, signaling and screening: A.Mas-Colell, M.Whinston and J. Green, Microeconomic Theory, Oxford University Press, 1995, chap 13.
- Optimal risk-sharing and moral hazard: Milgrom-Roberts, Economics Organization and Management, McGraw Hill, 1992, chaps.5 and 7.
- The Revelation Principle: Laffont, J.J. and D. Martimort, The Theory of Incentives: The Principal-Agent Model, Princeton University Press, 2001, chap 2.
- Adverse selection and moral-hazard in contracts theory: Bolton P. and M. Dewatripont, Contract Theory, The MIT Press, 2005, chaps 2 (sections 2.1 and 2.3.3) and 4 (sections 4.1 and 4.2).
- Games with incomplete information: Gibbons R., A primer in Game Theory, Prentice Hall, 1992, chaps 3 and 4.

Additional readings (downloadable from the table below)

1. Andreoni J. (1988), Why free ride?, Journal of Public Economics, 37, 291-304.
2. Andreoni J. and L. Vesterlund (2001), Which is the fair sex?, The Quarterly Journal of Economics, pp. 293-312.
3. Dulleck U., R. Kerschbamer (2006), On Doctors, Mechanics and Computer Specialists - The Economics of Credence Goods, Journal of Economic Literature 44, 5-42.
4. Fehr E. and S. Gächter, (2000), Cooperation and Punishment in Public Goods Experiments, The American Economic Review, 90(4), 980-994.
5. Holt C.A. and S.K. Laury, (1997), Classroom Games: Voluntary Provision of a Public Good, The Journal of Economic Perspectives, 11(4), 209-215.
6. Rees R., and A. Wambach, (2008), The Microeconomics of Insurance, Foundations and Trends in Microeconomics, Vol.4, Nos.1-2, 1-163.
7. M. Rothschild; J. Stiglitz, (1976), Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information, The Quarterly Journal of Economics, Vol. 90, No. 4, pp. 629-649.
8. Stiglitz, J.E. (2000), The Contributions of the Economics of Information to Twentieth Century Economics, The Quarterly Journal of Economics, Vol. 115, pp. 1441-1478.
9. Market failures in the health insurance market. Slides
   Rothschild and Stiglitz (1976)
   Rees and Wambach (2008)
   To learn more: Obama health insurance reform by Paolo Nicola Barbieri A brief summary

Exam rules

• The exam Micro 3 is divided in two parts. The first part is composed by 2 homework assignments. The first assignment will be available here http://www.moodle.unibo.it/course/category.php?id=171  on November 19. It will refer to topics treated in the first 4 lectures and it must be prepared and sent to Matteo (matteomaria.cati@unibo.it) not later than November 26 (at midnight). The second assignment will be available on December 2 at 1 p.m.. It will refer to topics treated in lectures from 5 to 8 and it must be prepared and sent to Matteo not later than December 10 (at 1 p.m.). The second part of the exam will take place on December 21 and will cover all the topics treated in the course with open questions. The sum of the two assignments grades will account for the 40% of the final grade (the maximum grade that can be obtained in the two assignments is 12 points, 6 for each assignment). The final exam will of course account for the 60% of the total grade. Assignments are prepared in groups. Each group is self-arranged and composed by two students at most.
• Groups must be notified by e-mail to Matteo not later than November 19. Please, note that the assignments will be evaluated according to RELATIVE (not absolute) GRADING.
  
• The final exam is written and composed by 2 open questions. Click here to have an idea of possible questions.
• The Micro 3 final exam will take place on December 21 in room 2, from 2 to 3 p.m.
• Subsequent exams dates will be as follows: one date in January-February 2012 (TBA), one date in September 2012 (TBA).
• Students who decide to take the exam in January-February, or in September 2012 (and who did not prepare the assignments during the course) should contact the lecturer two weeks before the exam to receive an assignment to be prepared and to be delivered to the lecturer the day in which the exam will take place. This unique assignment will refer to topics treated in all the course and will account for the 40% of the final grade. As before assignments can be prepared in self-arranged groups composed by two students at most.
• For students that was expected to pass Micro3 in the academic year 2010/2011, the Intergrated Course in ADVANCED ECONOMICS (I.C.) was built by three modules: MICROECONOMICS 3, ECONOMETRICS 3 and MACROECONOMICS 3. Students HAVE TO SIT THE THREE EXAMS ON THE SAME DATE. In other words, students OF THE PAST YEAR must take into account that THEY MUST TAKE THE WHOLE ADVANCED ECONOMICS (I.C.) EXAM. Future dates are: December 21, 2011, one date in January/February 2012 (TBA), one date in September 2012 (TBA). Thus, no single modules can be taken but only the integrated (entire) course. However, the two Micro3 assignments can be prepared during the course together with students of the current academic year.
  

To see how the assignment can be: click here (assignment 1 a.y. 2010/11) and also here (assignment 2 a.y. 2010/11).

Course plan