Readings

Textbooks

Required

[MWG] Mas-Collel, Andreu, Michael D. Whinston, and Jerry R. Green. Microeconomic Theory. New York, NY: Oxford University Press, 1995. ISBN: 9780195073409.

[FT] Fudenberg, Drew, and Jean Tirole. Game Theory. Cambridge, MA: MIT Press, 1991. ISBN: 9780262061414.

Supplementary

Rubinstein, Ariel. Lecture Notes in Microeconomic Theory: The Economic Agent. Princeton, NJ: Princeton University Press, 2006. ISBN: 9780691120317.

Osborne, Martin J., and Ariel Rubinstein. A Course in Game Theory. Cambridge, MA: MIT Press, 1994. ISBN: 9780262650403.

Readings by Sessions

Supplementary readings were also cited in lecture.

Course readings.
SES #	TOPICS	READINGS
1-2	Refresher on preference orderings and utility representation The expected utility hypothesis Positive and normative interpretations	Required MWG, chapters 6.A-6.B. Supplementary Harsanyi, J. C. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility." Journal of Political Economy 63 (August 1955): 309-321. Machina, M. "Expected Utility Analysis without the Independence Axiom." Econometrica 50 (1982): 277-323. Tversky, A., and D. Kahnemann. "The Framing of Decisions and the Psychology of Choice." Science 211, no. 4481 (January 30, 1981): 453-458.
3-4	Risk and risk attitudes Stochastic dominance Applications of expected utility in insurance and finance	Required MWG, chapters 6.C-6.D. Supplementary Athey, S. "Monotone Comparative Statics under Uncertainty." Quarterly Journal of Economics 117, no. 1 (February 2002): 187-223. Kimball, M. S. "Precautionary Saving in the Small and the Large." Econometrica 58 (1990): 53-73.
5	Supermodularity (supermodularity, log-supermodularity, and quasi-supermodularity) and monotone comparative statics Background risk; calibrating risk aversion	Required Athey, S. "Monotone Comparative Statics under Uncertainty." Quarterly Journal of Economics 117, no. 1 (February 2002): 187-223. Supplementary Topkis, D. Supermodularity and Complementarity. Princeton, NJ: Princeton University Press, 1998, chapter 2. ISBN: 9780691032443.
6	Beyond expected utility	Required MWG, chapters 6.E-6.F. Supplementary Foster, Dean, and Sergiu Hart. "An Operational Measure of Riskiness." Working Paper, Massachusetts Institute of Technology, Cambridge, MA, 2008. (PDF)^# Fox, C. R., and A. Tversky. "Ambiguity Aversion and Comparative Ignorance." Quarterly Journal of Economics 110, no. 3 (August 1995): 585-603. Gilboa, I., and D. Schmeidler. "Maximin Expected Utility with a Non-Unique Prior." Journal of Mathematical Economics 18 (1989): 141-153. Klibanoff, P., M. Marinacci, and S. Mukerji. "A Smooth Model of Decision Making under Ambiguity." Econometrica 73, no. 6 (November 2005): 1849-1892. Rabin, M. "Risk Aversion and Expected Utility Theory: A Calibration." Econometrica 68, no. 5 (September 2000): 1281-1292. Wald, Abraham. Statistical Decision Functions. New York, NY: John Wiley and Sons, 1950.
7	Refresher on game theory; rationalizability and iterated strict dominance multi-stage games; iterated conditional dominance in bargaining	Required FT, chapters 1, 2.1, 3.1-3.5, 4.1-4.2, and 4.4.
8	Equilibrium refinements: sequential equilibrium, trembling-hand perfection, and stability	Required FT, chapter 8. Supplementary Kohlberg, E., and J.-F. Mertens. "On the Strategic Stability of Equilibria." Econometrica 54 (1986): 1003-1038. Kreps, D., and R. Wilson. "Reputation and Imperfect Information." Journal of Economic Theory 27 (1982): 253-279. Selten, R. "Reexamination of the Perfectness Concept for Equilibrium Points in Extensive Form Games." International Journal of Game Theory 4 (1975): 25-55.
9	Signaling games	Required FT, chapters 11.1-3. Crawford, V., and J. Sobel. "Strategic Information Transmission." Econometrica 60 (1982): 1431-1450. Supplementary Chen, Y., N. Kartik, and J. Sobel. "Selecting Cheap Talk Equilibria." Econometrica 76, no. 1 (2008): 117-136. Cho, I.-K., and D. Kreps. "Signaling Games and Stable Equilibria." Quarterly Journal of Economics 102, no. 2 (1987): 179-221. Cho, I.-K., and J. Sobel. "Strategic Stability and Uniqueness in Signaling Games." Journal of Economic Theory 50, no. 2 (1990): 381-413. Fudenberg, D., and J. Tirole. "Perfect Bayesian and Sequential Equilibrium." Journal of Economic Theory 53 (1991): 236-260.
10	Positive theory of auctions	Required FT, pp. 223-236. Milgrom, P., and R. Weber. "A Theory of Auctions and Competitive Bidding." Econometrica 50 (1982):1089-1122. Vickrey, W. "Counterspeculation, Auctions, and Competitive Sealed Tenders." Journal of Finance 16 (1961): 8-37.
11	Global games	Required Carlsson, H., and E. van Damme. "Global Games and Equilibrium Selection." Econometrica 61, no. 5 (1993): 989-1018. Supplementary Morris, S., and H. S. Shin. "Unique Equilibrium in a Model of Self-fulfilling Currency Attacks." American Economic Review 88, no. 3 (1998): 587-597.
12	Repeated games with perfect monitoring	Required FT, chapters 5.1, 5.2, and 5.4. Farrell, J., and E. S. Maskin. "Renegotiation in Repeated Games." Games and Economic Behavior 1 (1989): 327-360. Supplementary Benoit, J. P., and V. Krishna. "Finitely Repeated Games." Econometrica 53 (1985): 890-904. Fudenberg, D., and E. Maskin. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information." Econometrica 54 (1986): 533-556.
13	On the power of correlation Review	Supplementary FT, chapter 2.2.