Microeconomic Theory

Contents
Preface
PART ONE: INDIVIDUAL DECISION MAKING
	Chapter 1. Preference and Choice
		1.A Introduction
		l.B Preference Relations
		l.C Choice Rules
		1.D The Relationship between Preference Relations and Choice Rules
		Exercises
	Chapter 2. Consumer Choice
		2.A Introduction
		2.B Commodities
		2.C The Consumption Set
		2.D Competitive Budgets
		2.E Demand Functions and Comparative Statics
		2.F The Weak Axiom of Revealed Preference and the Law of Demand
		Exercises
	Chapter 3. Classical Demand Theory
		3.A Introduction
		3.B Preference Relations: Basic Properties
		3.C Preference and Utility
		3.D The Utility Maximization Problem
		3.E The Expenditure Minimization Problem
		3.F Duality: A Mathematical Introduction
		3.G Relationships between Demand, Indirect LItility, and Expenditure Functions
		3.H Integrability
		3.I Welfare Evaluation of Economic Changes
		3.J The Strong Axiom of Revealed Preference
		Appendix A: Continuity and Differentiability Properties of Walrasian Demand
		Exercises
	Chapter 4. Aggregate Demand
		4.A Introduction
		4.B Aggregate Demand and Aggregate Wealth
		4.C Aggregate Demand and the Weak Axiom
		4.D Aggregate Demand and the Existence of a Representative Consumer
		Appendix A: Regularizing Effects of Aggregation
		Exercises
	Chapter 5. Production
		5.A Introduction
		5.B Production Sets
		5.C Profit Maximization and Cost Minimization
		5.D The Geometry of Cost and Supply in the Single-Output Case
		5.E Aggregation
		5.F Efficient Production
		5.G Remarks on the Objectives of the Firm
		Appendix A: The Linear Activity Model
		Exercises
	Chapter 6. Choice Under Uncertainty
		6.A Introduction
		6.B Expected Utility Theory
		6.C Money Lotteries and Risk Aversion
		6.D Comparison of Payoff Distributions in Terms of Return and Risk
		6.E State-dependent Utility
		6.F Subjective Probability Theory
		Exercises
PART TWO: GAME THEORY
	Chapter 7. Basic Elements of Noncooperative Games
		7.A Introduction
		7.B What Is a Game?
		7.C The Extensive Form Representation of a Game
		7.D Strategies and the Normal Form Representation of a Game
		7.E Randomized Choices
		Exercises
	Chapter 8. Simultaneous-Move Games
		8.A Introduction
		8.B Dominant and Dominaed Strategies
		8.C Rationalizable Stratgies
		8.D Nash Equilibrium
		8.E Games of Incomplete Information: Bayesian Nash Equilibrium
		8.F The Possibility of Mistakes: Trembling-Hand Perfection
		Appendix A: Existence of Nash Equilibrium
		Exercises
	Chapter 9. Dynamic Games
	9.A Introduction
	9.B Sequential Rationality, Backward Induction, and Subgame Perfection
	9.C Beliefs and Sequential Rationality
	9.D Reasonable Beliefs and Forward Induction
	Appendix A: Finite and Infinite Horizon Bilateral Bargaining
	Appendix B: Extensive Form Trembling-Hand Perfect Nash Equilibrium
	Exercises
PART THREE: MARKET EQUILIBRIUM AND MARKET FAILURE
	Chapter 10. Competitive Markets
		10.A Introduction
		10.B Pareto Optimality and Competitive Equilibria
		10.C Partial Equilibrium Competitive Analysis
		10.D The Fundamental Welfare Theorems in a Partial Equilibrium Context
		10.E Welfare Analysis in the Partial Equilibrium Model
		10.F Free-Entry and Long-Run Competitive Equilibria
		10.G Concluding Remarks on Partial Equilibrium Analysis
		Exercises
	Chapter 11. Externalities and Public Goods
		ll.A Introduction
		ll.B A Simple Bilateral Externality
		ll.C Public Goods
		ll.D Multilateral Externalities
		ll.E Private Information and Second-Best Solutions
		Appendix A: Nonconvexities and the Theory of Externalities
		Exercises
	Chapter 12. Market Power
		12.A Introduction
		12.B Monopoly Pricing
		12.C Static Models of Oligopoly
		12.D Repeated Interaction
		12.E Entry
		12.F The Competitive Limit
		12.G Strategic Precommitments to Affect Future Competition
		Appendix A: Infinitely Repeated Games and the Folk Theorem
		Appendix B: Strategic Entry Deterrence and Accommodation
		Exercises
	Chapter 13. Adverse Selection, Signaling, and Screening
		13.A Introduction
		13.B Informational Asymmetries and Adverse Selection
		13.C Signaling
		13.D Screening
		Appendix A: Reasonable-Beliefs Refinements in Signaling Games
		Exercises
	Chapter 14. The Principal-Agent Problem
		14.A Introduction
		14.B Hidden Actions (Moral Hazard)
		14.C Hidden Information (and Monopolistic Screening)
		14.D Hidden Actions and Hidden Information: Hybrid Models
		Appendix A: Multiple Effort Levels in the Hidden Action Model
		Appendix B: A Formal Solution of the Principal-Agent Problem with Hidden Information
		Exercises
PART FOUR: GENERAL EQUILIBRIUM
	Chapter 15. General Equilibrium Theory: Some Examples
		15.A Introduction
		15.B Pure Exchange: The Edgeworth Box
		15.C The One-Consumer, One-Producer Economy
		15.D The 2x2 Production Model
		15.E General Versus Partial Equilibrium Theory
		Exercises
	Chapter 16. Equilibrium and Its Basic Welfare Properties
		16.A Introduction
		16.B The Basic Model and Definitions
		16.C The First Fundamental Theorem of Welfare Economics
		16.D The Second Fundamental Theorem of Welfare Economics
		16.E Pareto Optimality and Social Welfare Optima
		16.F First-Order Conditions for Pareto Optimality
		16.G Some Applications
		Appendix A: Technical Properties of the Set of Feasible Allocations
		Exercises
	Chapter 17. The Positive Theory of Equilibrium
		17.A Introduction
		17.B Equilibrium: Definitions and Basic Equations
		17.C Existence of Walrasian Equilibrium
		17.D Local Uniqueness and the Index Theorem
		17.E Anything Goes: The Sonnenschein-Mantel-Debreu Theorem
		17.F Uniqueness of Equilibria
		17.G Comparative Statics Analysis
		17.H Tatonnement Stability
		17.1 Large Economies and Nonconvexities
		Appendix A: Characterizing Equilibrium through Welfare Equations
		Appendix B: A General Approach to the Existence of Walrasian Equilibrium
		Exercises
	Chapter 18. Some Foundations for Competitive Equilibria
		18.A Introduction
		18.B Core and Equilibria
		18.C Noncooperative Foundations of Walrasian Equilibria
		18.D The Limits \\o Redistribution
		18.E Equilibrium and the Marginal Productivity Principle
		Appendix A: Cooperative Game Theory
		Exercises
	Chapter 19. General Equilibrium Under Uncertainty
		19.A Introduction
		19.B A Market Economy with Contingent Commodities: Description
		19.C Arrow-Debreu Equilibrium
		19.D Sequential Trade
		19.E Asset Markets
		19.F Incomplete Markets
		19.G Firm Behavior in General Equilibrium Models Under Uncertainty
		19.H Imperfect Information
		Exercises
	Chapter 20. Equilibrium and Time
		20.A Introduction
		20.B Intertemporal Utility
		20.C Intertemporal Production and Efficiency
		20.D Equilibrium: The One-Consumer Case
		20.E Stationary Paths, Interest Rates, and Golden Rules
		20.F Dynamics
		20.G Equilibrium: Several Consumers
		20.H Overlapping Generations
		20.I Remarks on Nonequilibrium Dynamics: Tatonnement and Learning
		Exercises
PART FIVE: WELFARE ECONOMICS AND INCENTIVES
	Chapter 21. Social Choice Theory
		21.A Introduction
		21.B A Special Case: Social Preferences over Two Alternatives
		21.C The General Case: Arrow’s Impossibility Theorem
		21.D Some Possibility Results: Restricted Domains
		21.E Social Choice Functions
		Exercises
	Chapter 22. Elements of Welfare Economics and Axiomatic Bargaining
		22.A Introduction
		22.B Utility Possibility Sets
		22.C Social Welfare Functions and Social Optima
		22.D Invariance Properties of Social Welfare Functions
		22.E The Axiomatic Bargaining Approach
		22.F Coalitional Bargaining: The Shapley Value
		Exercises
	Chapter 23. Incentives and Mechanism Design
		23.A Introduction
		23.B The Mechanism Design Problem
		23.C Dominant Strategy Implementation
		23.D Bayesian Implementation
		23.E Participation Constraints
		23.F Optimal Bayesian Mechanisms
		Appendix A: Implementation and Multiple Equilibria
		Appendix B: Implementation in Environments with Complete Information
		Exercises
MATHEMATICAL APPENDIX
	M.A Matrix Notation for Derivatives
	M.B Homogeneous Functions and Euler’s Formula
	M.C Concave and Quasiconcave Functions
	M.D Matrices: Negative (Semi)Definiteness and Other Properties
	M.E The Implicit Function Theorem
	M.F Continuous Functions and Compact Sets
	M.G Convex Sets and Separating Hyperplanes
	M.H Correspondences
	M.I Fixed Point Theorems
	M.J Unconstrained Maximization
	M.K Constrained Maximization
	M.L The Envelope Theorem
	M.M Linear Programming
	M.N Dynamic Programming
Index