Università Roma Tre

Parte I – The textbook economy with "perfect competition": old concepts and new insights
1. Individual decisions Decisioni individuali
• Consumer theory (preferences, utility functions, balance constraint, demand curve, individual welfare).
• Producer theory (technology, cost function, profit maximization, supply function).
• “Big data” and individual decisions: learning about individual characteristics from their choices.
2. "Perfectly competitive" markets: equilibrium, efficiency, equity.
• Single market equilibrium
• General equilibrium, efficiency and equity.
• Information revealed by prices.
Parte II - Choices and transactions under imperfect information
1. Choice under uncertainty. Uncertainty and risk. Lotteries. Expected utility. Attitudes toward. Certainty equivalence and risk premia. Decisions under uncertainty and risk. The importance of risk diversification:
demand of financial assets and insurance. The value of information.
2. Choice under incomplete information: strategic interactions. Game theory. One-stage games. Nash equilibrium. Dynamic games. Backward induction and "sequentially rational" NE. Cooperation and mutual agreements.
3. Incomplete information and market power
• Benchmark Monopoly.
• Oligopoly. Models of price competition (Bertrand-Nash). Models of quantitative competition (Cournot-Nash). Collusion. Barriers to entry and monopolistic competition.
Parte III - Choices and "contracts" under information asymmetries.
1. Market power and price discrimination, two-part tarifs, bundling.
2. An introduction to adverse selection, moral hazard, and contracts.

B. Douglas Bernheim, Michael D. Whinston, Microeconomia, Mc Graw Hill, 2022.
Additional material will be distributed through the Moodle platform during classes.