Principles of Microeconomics: An Integrative Approach

Preface to the Second Edition
Preface to the First Edition
Contents
Part I Introduction
	1 First Principles
		1.1 What Is Economics About?
		1.2 Some Methodological Remarks
			1.2.1 True and Reasonable Theories
			1.2.2 Theories and Models
			1.2.3 The Virtue of Thriftiness
			1.2.4 Do Assumptions Matter?
			1.2.5 An Example
			1.2.6 Critical Rationalism
			1.2.7 Positive and Normative Theories
			1.2.8 Schools of Economic Thought
		References
		Further Reading
	2 Gains from Trade
		2.1 Introduction
		2.2 An Example
		2.3 How General Is the Theory of Comparative Advantage?
		2.4 Comparative Advantage and the Organization of Economic Activity
		References
		Further Reading
Part II A Primer in Markets and Institutions
	3 Introduction
		3.1 General Remarks
		3.2 Taxonomy of Markets
		References
		Further Reading
	4 Supply and Demand Under Perfect Competition
		4.1 Introduction
		4.2 Determinants of Supply and Demand
		4.3 Equilibrium
		4.4 Equilibrium Analysis
		References
		Further Reading
	5 Normative Economics
		5.1 Introduction
		5.2 Normative Properties of Competitive Markets
		5.3 Willingness to Pay and Preferences
		References
		Further Reading
	6 Externalities and the Limits of Markets
		6.1 Introduction
		6.2 Transaction Costs
			6.2.1 An Example
			6.2.2 Analysis of Externalities on Markets
			6.2.3 The Bigger Picture
				6.2.3.1 Externalities in Traffic
				6.2.3.2 Environmental Externalities
				6.2.3.3 Morality and Corporate Social Responsibility
				6.2.3.4 Status
		6.3 Four Boundary Cases
		References
		Further Reading
Part III Foundations of Behavior and Interaction
	7 Decisions and Consumer Behavior
		7.1 Basic Concepts
			7.1.1 Choice Sets and Preferences
			7.1.2 Indifference Curves
			7.1.3 Utility Functions
		7.2 Demand on Competitive Markets
			7.2.1 Graphical Solution
			7.2.2 Analytical Solution
				7.2.2.1 Necessary Conditions for a Maximum
				7.2.2.2 Sufficient Conditions for a Maximum
			7.2.3 Three Examples
				7.2.3.1 Homothetic Strictly Convex Preferences
				7.2.3.2 Perfect Substitutes
				7.2.3.3 Perfect Complements
			7.2.4 Comparative Statics and the Structure of Market Demand
			7.2.5 Changes in Income
			7.2.6 Changes in Price
		References
		Further Reading
	8 Decisions Under Uncertainty and Risk
		8.1 A Model of Uncertainty and Risk
		8.2 Decisions Under Uncertainty
			8.2.1 Maximin Rule
			8.2.2 Maximax Rule
			8.2.3 Hurwicz Rule
			8.2.4 Minmax-Regret Rule
			8.2.5 Laplace Rule
		8.3 Decisions Under Risk
			8.3.1 Lotteries and Expected-Payoff Rule
			8.3.2 Critique of the Expected-Payoff Rule
			8.3.3 Expected-Utility Theory
			8.3.4 The Allais Paradox
			8.3.5 Propensities Towards Risk
			8.3.6 Insurance
				8.3.6.1 A Model with Fixed Coverage
			8.3.7 A Model with Endogenous Coverage
		References
		Further Reading
	9 Principles of Game Theory
		9.1 Introduction
		9.2 What Is a Game?
		9.3 Elements of Game Theory
		9.4 Normal-Form Games
			9.4.1 Multiple Equilibria
			9.4.2 Collectively and Individually Rational Behavior
			9.4.3 Simple Games as Structural Metaphors
		9.5 Extensive-Form Games
		9.6 Summary
		References
		Further Reading
	10 Behavioral Economics
		10.1 Introduction
		10.2 Basic Concepts
		10.3 Social Preferences
			10.3.1 Kin Selection
			10.3.2 Reciprocity
			10.3.3 Altruism and Spite
			10.3.4 Inequality Aversion
			10.3.5 Intention-Based Preferences
			10.3.6 Conclusions
		10.4 Boundedly Rational Behavior
			10.4.1 Prospect Theory
				10.4.1.1 The Structure of Subjective Value Functions
				10.4.1.2 The Structure of Decision Weights
				10.4.1.3 Applications
				10.4.1.4 Summary
			10.4.2 Anchoring
			10.4.3 Confirmation Bias
		10.5 An Evolutionary Perspective on Biases and Rationality
		References
		Further Reading
	11 Foundations of Perception and Decision-Making
		11.1 Introduction
		11.2 A Multilevel Model of Adaptation
			11.2.1 Genetic Adaptation
			11.2.2 Epigenetic Adaptation
			11.2.3 Affective Adaptation
				11.2.3.1 Dopamine
				11.2.3.2 Fear and Anxiety
				11.2.3.3 Disgust
				11.2.3.4 Oxytocin
				11.2.3.5 Testosterone
			11.2.4 Cognitive and Metacognitive Adaptation
				11.2.4.1 Confabulation
				11.2.4.2 The Narrative Self
				11.2.4.3 Concluding Remarks and Implications for Economics
		11.3 Where Do We Stand?
			11.3.1 Virtue Ethics and the Creation of Good Habits
			11.3.2 Implications for an Economy that Promotes the Good Life
		References
		Further Reading
Part IV Firm Behavior and Industrial Organization
	12 Costs
		12.1 What Are Costs, and Why Are They Important?
		12.2 A Systematic Treatment of Costs
		Reference
		Further Reading
	13 Firm Behavior Under Perfect Competition
		13.1 Introduction
		13.2 Production Technology and Market Structure
		13.3 The Short Versus the Long Run
		13.4 Firm and Market Supply
		References
		Further Reading
	14 Firm Behavior in Monopolistic Markets
		14.1 Introduction
		14.2 Conditions for the Existence of a Monopoly
		14.3 Profit Maximization in Monopolistic Markets
		14.4 Monopoly Without Price Discrimination
			14.4.1 The Single-Product Monopoly
			14.4.2 Two- or Multi-Sided Markets
		14.5 Monopoly with Price Discrimination
			14.5.1 First-Degree Price Discrimination
			14.5.2 Second-Degree Price Discrimination
			14.5.3 Third-Degree Price Discrimination
		14.6 Monopolistic Competition
		References
		Further Reading
	15 Firm Behavior in Oligopolistic Markets
		15.1 Introduction
		15.2 Cournot Duopoly Model
		15.3 The Linear Cournot Model with n Firms
		15.4 The Bertrand Duopoly Model
		15.5 Conclusion and Extensions
		References
		Further Reading
Part V Appendix
	16 A Case Study
		16.1 The Grounding of Swissair
		16.2 Some Facts About the Aviation Industry in Europe
		16.3 Applying Economic Theory
			16.3.1 Costs
			16.3.2 The Linear Cournot Model with n Firms
			16.3.3 Extensions
		16.4 How About Swissair?
		16.5 Concluding Remarks
	17 Mathematical Appendix
		17.1 General Remarks
		17.2 Functions with Several Explanatory Variables
		17.3 Solution to Systems of Equations
		17.4 Optimization Under Constraints
			17.4.1 Sufficient Conditions
			17.4.2 Necessary Conditions
		17.5 Elasticities
		Further Reading
Index