Download pdf - AFRICAN ECONOMIC RESEARCH CONSORTIUM (AERC) · Theory of Market Structure ( 4 hours) IV. General Equilibrium Theory ( 9 hours) ... Silberberg, E. and W. Suen (2002), The Structure

AFRICAN ECONOMIC RESEARCH CONSORTIUM (AERC)

COLLABORATIVE PHD PROGRAMME (CPP) IN

ECONOMICS FOR SUB-SAHARAN AFRICA

MICROECONOMICS

COURSE OUTLINE

(Revised: February, 2014)

Collaborative PhD Programme

CPP Microeconomics Course Outline 2

ECON 601: MICROECONOMICS I

I. Consumer Theory (18 hours)

II. Theory of Production and Supply ( 6 hours)

III. Theory of Market Structure ( 4 hours)

IV. General Equilibrium Theory ( 9 hours)

V. Economic Choice under Uncertainty ( 5 hours)

VI. Game Theory (18 hours)

ECON 602: MICROECONOMICS II

I. Information Economics (18 hours)

II. Welfare Economics and Social Choice (11 hours)

III. Market Failure ( 9 hours)

IV. Market Structure Revisited (12 hours)

V. Other Topics in Microeconomics (10 hours)



ECON 601: MICROECONOMICS I

A. INTRODUCTION

The main objective of the course is to provide participating graduate students with a

comprehensive understanding of advanced microeconomic theory so that at the end of the

course they will be acquainted with the state of the art in microeconomic analysis. The

students will be equipped to apply microeconomic concepts and tools in the African

environment. The course is designed for one-semester and will treat microeconomic issues at

an advanced level. The topics covered will include: consumer theory; theory of production

and supply; theory of market structure; general equilibrium theory; choice under uncertainty

and game theory.

Core Texts:

Mas-Colell, A., M. D. Whinston, and J.R. Green (1995), Microeconomic Theory, New York,

Oxford University Press. (Henceforth referred to as MWG)

Jehle, G.A. and P. Reny (2011), Advanced Microeconomic Theory 3rd Edition, Prentice Hall

Inc. (Henceforth referred to as J & R)

Supplementary Texts:

Bowles, S (2003), Microeconomics: Behaviour, Institutions, and Evolution, Princeton: NJ.

Princeton University Press.

Eatwell, J., Milgrom, M. and P. Newman (1987), A Dictionary of Economics, MacMillan.

Cowell F. (2006), Microeconomics: Principles and Analysis, Oxford University Press, New

York.

Gravelle, H. and R. Rees (2004), Microeconomics 3rd Edition Prentice Hall.

Kreps, David, M. (1990) A Course in Microeconomic Theory Harvester Wheatsheaf New

York.

Varian, H. R. (1992), Microeconomic Analysis 3rd Edition, W.W. Norton and Company New

York.

The following textbooks cover the mathematical prerequisites for this course.



Beavis B. and I. M. Dobb (1990), Optimization and Stability Theory for Economic Analysis,

Ch. 1-4. Cambridge University Press.

Chiang, A.C. and K. Wainright (2005), Fundamental Methods of Mathematical Economics,

4th Edition, McGraw-Hill.

Dixit A.K (1990), Optimization in Economic Theory 2nd Edition, Oxford, Oxford University

Press.

Efe A.O. (2007), Real Analysis with Economics Applications, Princeton.

Rudin (1967), Real Analysis, McGraw-Hill.

Silberberg, E. and W. Suen (2002), The Structure of Economics: A Mathematical Analysis,

3rd Edition, McGraw-Hill/Irwin, New York.

Simon, C. and L. Blume (1994), Mathematics for Economists, New York, Norton.

Sydsaeter Knut, Peter Hammond J. & Arne Strom (2014), Further Mathematics for Economic

Analysis, Pearson Education/Prentice Hall

Takayama, A. (1993), Analytical Methods in Economics, Part 1-3, Ann Arbor: The University

of Michigan Press.

(+) below denotes compulsory reading materials while other references are optional

reading.



B. DETAILED COURSE OUTLINE

1. THEORY OF CONSUMER BEHAVIOUR

1.1. Preferences, Utility and Demand (4 hours)

+J & R Ch.1

+MWG Ch. 1 and 3

Barten. A. and V. Bohm (1982), “Consumer Theory” in Arrow K. and Intrilligator M.D. eds.

Handbook of Mathematical Economics, Vol. II, pp. 381- 429. Amsterdam: North

Holland.

Deaton, A. and J. Muellbauer (1989), Economics and Consumer Behaviour 2nd Edition,

Cambridge: Cambridge University Press. Ch. 1-2.

Gravelle, H. and R. Rees (2004), Microeconomics 3rd Edition, Prentice Hall. Ch. 2 - 3.

Liebenstein, H., (1970) “Bandwagon, Snob, and Veblen Effects in the Theory of Consumers’

Demand,” Quarterly Journal of Economics, 64 (May): 183-207.

Phlips L. (1983), Applied Consumption Analysis 2nd Edition, Amsterdam; North Holland

Press. Ch. 1-5

Simon, H. (1959), “Theories of Economic Decision-Making in Economics and Behavioural

Science,” American Economic Review, XLIV, 3, June.

Simon, H., (1973), “Rationality as Process and Product of Thought,” American Economic

Review, Papers and Proceedings, (May), p. 1-14.

Varian, H. R. (1992), Microeconomic Analysis 3rd Edition, New York: W.W. Norton and

Company. Ch. 7

1.2 Indirect Utility, Expenditure Functions and Duality Theory (4 hours)

+ J & R Ch 1 and 2

+MWG Ch. 3



+Deaton, A. and J. Muellbauer (1989), Economics and Consumer Behaviour 2nd Edition,

Cambridge: Cambridge University Press Ch. 1-2.


Company. Ch. 7.

Strauss, J. (1986) “Estimating the Determinants of Food Consumption and Caloric

Availability in Sierra Leone,” Ch. 4 in Singh, I. L. Squire and J. Strauss eds.

Agricultural Household Models. Baltimore: The Johns Hopkins University Press.

Gravelle, H. and R. Rees (2004), Microeconomics 3rd Edition Prentice Hall Ch. 4.

Barten. A. and V. Bohm (1982), “Consumer Theory” Ch. 9 in Arrow K. and Intrilligator M.D.

(ed.) Handbook of Mathematical Economics vol. II, pp. 381- 429. North Holland

Amsterdam.

Diamond, Peter and Dan McFadden (1974), “Some Uses of the Expenditure Function in

Public Finance,” Journal of Public Economics, 3, 3-21.

Diewert, W.E. (1993), “Duality Approaches to Consumer Theory,” Ch.12 in Arrow, K.J. and

M.D. Intriligator (eds.) Handbook of Mathematical Economics, 1, Amsterdam, North-

Holland.

Gorman, W.M. (1976), “Tricks with Utility Functions,” in Artis, M. and A.R. Nobay (eds.),

Essays in Economic Analysis, Cambridge University Press. pp. 211-243.

1.3 Revealed Preference (2 hours)

+ J & R Ch 2: 86-92

+MWG Ch 2

+Koo, A.Y.C. and Georg Haverkamp, “Structure of Revealed Preference: Some Preliminary

Evidence,” Journal of Political Economy, July/August 1972, 724-744.

Kreps, David, M., (1990) A Course in Microeconomic Theory Harvester Wheatsheaf New York.

Richter, M. (1966), “Revealed Preference Theory,” Econometrica 34, pp.635-45.

Samuelson, P. A., (1983), Foundations of Economics Analysis (enlarged edition). Cambridge,

Massachusetts: Harvard University Press.



Samuelson, P. A. (1948), Consumption theory in terms of revealed preference, Economica 15,

pp. 243-53.

Samuelson, P. A. (1947), Foundations of Economic Analysis, Harvard Economic Studies

Springer Science and Business Media, Inc., 2005. Vol. LXXX, Cambridge: Harvard

University Press.


Company. Ch 8

1.4 Evaluation of Welfare Changes (4 hours)

Consumer Surplus, Compensating and Equivalent Variation, Price and Quantity

Indices

+MWG Ch. 3 (3.I)

+J&R Ch. 4: 166-175

+ Gravelle, H. and R. Rees (2004), Microeconomics 3rd Edition Prentice Hall Ch. 4.

+Willig, R. D. 1976 “Consumer Surplus without Apology.” American Economic Review 66,

pp. 587-97.

+ Diewert W.E. (1987), “Index Numbers,” In The New Palgrave Dictionary of Economics,

edited by J. Eatwell, M. Milgate, and P. Newman. New York: Macmillan 2 pp. 767-

780.

Bacon R. (1995), “Measurement of Welfare Changes Caused by Large Price Shifts.” World

Bank Discussion Papers No. 273. The World Bank Washington D.C.

Braithwait, S.D. (1980), “The Substitution Bias of the Laspeyres Price Index: An Analysis

Using Estimated Cost of Living Indices,” American Economic Review (March): 64-77.

Caves, D.W., L.R.Christensen and W.E. Diewert (1982), The Economic Theory of Index

Numbers and the Measurement of input, output and Productivity,” Econometrica 50,

1393-1414.

Chipman J.S. and J.C. Moore (1980), “Compensating Variation, Consumer Surplus, and

Welfare,” American Economic Review, 70, 933-49.



Deaton, A. (1997), The Analysis of Household Surveys: A Microeconometric Approach.

World Bank, Washington, D.C.

Deaton, A. and J. Muellbauer (1989), Economics and Consumer Behaviour 2nd Edition,

Cambridge: Cambridge University Press, Ch 7 and 8.

Freeman, A.M. (1993), The Measurement of Environmental and Resource Values: Theory and

Methods. Washington: DC. Resources for the future. (Ch. 3)


Company, Ch. 10.



1.5. Consumer Behaviour under Rationing (2 hours)

+ Deaton, A. and J. Muellbauer (1989), Economics and Consumer Behaviour 2nd Edition,

Cambridge: Cambridge University Press Ch. 4 (section 4.3)

+Deaton, A. (1981) “Theoretical and Empirical Approaches to Consumer Behaviour under

Rationing” Ch. 3 in Deaton. A. (Ed) Essays in the theory and measurement of

consumer behaviour. Cambridge, England: Cambridge University Press.

+Neary J. P. and K.W. Roberts. (1980) “The Theory of Consumer Behaviour under

Rationing,” European Economic Review, 13 pp. 25-42.

Bevan, D.L., A. Bigsten, P. Collier and J.W. Gunning (1987), “Peasant Supply Response in

Rationed Economies” World Development, 15(4), pp. 431-39.

Neary J. (1987), “Rationing,” In The New Palgrave Dictionary of Economics, edited by J.

Eatwell, M. Milgate, and P. Newman. New York: Macmillan. 4 pp. 92-96.

Saah Raaj K. (1987), Queues, Rations, and markets: Comparisons of Outcomes for the Poor

and the Rich,” American Economic Review, March. pp 69-77.

Tobin, J., and H.S. Houthakker (1950-51), “The Effects of Rationing on Demand Elasticities.”

Review of Economic Studies, 18, pp. 140-53.

1.6 Labour Supply and Inter-temporal Choice (2 hours)

+Becker, G. S.(1993), A Treatise on the Family, Chicago: IL. University of Chicago Press,

Ch 2-4.

+Bardhan, P and Udry, C (1999), “Interlinked transactions and rural development,” Ch 9 in

Development Microeconomics, Oxford University Press.

+Berndt, E (1993), “Whether and how much women work for pay? Applications of Limited

dependent Variable Procedures,” Ch 11 in The Practice of Econometrics, Addison-

Wesley Publishing Company Inc.

+Gravelle and Rees Ch. 15.

Deaton, A. and C. Paxson (1994), “Intertemporal Choice and Inequality,” Journal of Political

Economy, 102.



Imai S. And Keane M. P. (2004), “Intertemporal Labour Supply and Human Capital

Accumulation,” International Economic Review, 45, pp 601 – 641.

Lovo S. (2012), “Market Imperfections, Liquidity, and Farm Household Labour Allocation:

The Case of Rural South Africa,” Agricultural Economics, vol 43, pp471 – 428.

II. THEORY OF PRODUCTION AND SUPPLY

2.Production sets, Profit maximization and cost minimization, Duality, Aggregation,

Efficiency (6 hours)

+ J &R Ch 3.

+MWG Ch. 5

+Nadiri, M.I. (1982) “Producers theory,” Ch. 10 in Arrow and Intrilligator op. cit, pp. 431-

490

+Diewert, W.E. (1982) “Duality Approaches to Microeconomic Theory” Ch. 12 in Arrow K.

J. and M. Intriligator. Handbook of Mathematical Economics Vol 2 Amsterdam North-

Holland.

+Udry, Christopher (1999) Efficiency and Market Structure: Testing for Profit Maximization

in African Agriculture,” in Ranis and Raut eds. Trade, Growth and Development:

Essays in Honor of T.N Srinivasan, Amsterdam: Elsevier Science.

Varian Ch. 1-6

Blackorby, C., Primont, D. and R. Russell (1979), Duality, Separability and Functional

Structure: Theory and Economic Applications, Amsterdam, North-Holland.

Coelli, T.J., Rao, D.S.P., O'Donnell, C.J., Battese, G.E. (2005), An Introduction to Efficiency

and Productivity Analysis 2nd Edition. Springer Science and Business Media, Inc. 350

pp.

Fuss, M. and D. McFadden (eds)(1978), Production Economics: A Dual Approach to Theory

and Applications, Volumes 1 and 2, Amsterdam, North-Holland.



McFadden, D. 1978, “Cost, revenue, and profit functions,” In: Production Economics: a Dual

Approach to Theory and Applications, vol. 1, Fuss, M. and D. McFadden (eds).

Amsterdam:North Holland. pp. 3-109.

III. MARKET STRUCTURE

3.1. Perfect Competition (1 hour)

+J&R Ch 4

+MWG Ch 10

Varian Ch. 13

Mankowski Louis and Joseph Ostroy (2001), “Perfect Competition and the Creativity of the

Market,” Journal of Economic Literature. Vol. XXXIX (June) 479-535.

3.2 Monopoly and Monopolistic Competition (3 hours)

Monopoly Equilibrium, Price Discrimination, Welfare; Monopolistic Competition

+J&R Ch. 4: 158-165

+MWG Ch. 12: 384-387

+Tirole Ch. 1-3

Varian Ch. 14

Chamberlain, E. (1933), Theory of Monopolistic Competition, Cambridge, Mass: Harvard

University Press.

Tirole ,J. (1988), The Theory of Industrial Organization, Cambridge, Massachusetts,

Cambridge University Press. Chs. 1-3.

Varian, H. R. (1989) “Price Discrimination,” Ch. 12 in Schmanlese, R. and R. Willig (ed.)

Handbook of Industrial Organization, Amsterdam; North Holland.



IV. GENERAL EQUILIBRIUM THEORY

4.1 Pure Exchange Economy, Production Economy and Welfare (3 hours)

+J&R Ch 5

+MWG Ch. 15-17.

Varian, Ch. 17-18

Gravelle and Rees.

Eatwell, J., M. Milgate and P. Newman (ed.) (1987), General Equilibrium, Macmillan.

4.2 Existence, Uniqueness and Stability of Equilibria (3 hours)

+J&R Ch 5

+MWG Ch. 17.

+Debreu G. (1982), “Existence of competitive equilibrium,” in Arrow, K.J. and M.D.

lntrilligator (eds.), Handbook of Mathematical Economics, Vol. II, New York: North

Holland.

Varian Ch 17 and 18.

Gravelle and Rees Ch. 16.

Aliprantis, C.D., et al (1989), Existence and Optimality of Competitive Equilibria, New York

and Berlin, Springer Verlag.

Arrow, K.J. and F.H. Hahn (1971), General Competitive Analysis, San Francisco: Holden

Day.

Debreu, G (1959), Theory of Value. New York: John Wiley & Sons

Grandmont, J.M. (1992), “Transformations of the commodity space, behavioural

heterogeneity, and the aggregation problem,” Journal of Economic Theory, 57, pp.1-35.

Hildenbrand W. and A. Kirman (1988), Equilibrium Analysis, Amsterdam, North Holland,

chs. 1, 2, 3*, 6 and Appendices.

Mackinnon, John (1998), “Food Storage, Multiple Equilibria and Stability: Why Stable



Markets May Become Unstable During Food Crises,” Centre for the Study of African

Economies WPS/99-1. Oxford University.

4.3 Core and Equilibria (2 hours)

+J&R Ch 5

+MWG Ch. 18

+Hildenbrand, W. and A. Kirman (1988), Equilibrium Analysis, Amsterdam, North Holland,

chs. 4 and 5

Varian Ch. 21.

Anderson, R.M. (1978), An elementary core equivalence theorem,” Econometrica, 46, pp. 83-

87.

Hildenbrand, W. (1982), “Core of an Economy” in Arrow, K.J. and M.D. Intrilligator (eds.),

Handbook of Mathematical Economics, II, New York, North Holland.

Mas-Colell, A. (1989), “An Equivalence Theorem for a Bargaining Set,” Journal of

Mathematical Economics, 18, pp. 129-139.

4.4 Applied General Equilibrium Models (1 hour)

+Shoven, J.B. and J. Whalley (1984), “Applied General Equilibrium Models of Taxation and

International Trade: An Introduction and Survey,” Journal of Economic Literature,

Vol. XXII pp. 1007-1051.

Bédia, F. Aka (2006), “Poverty, Inequality and Welfare Effects of Trade Liberalization in

Côte D’ Ivoire: A Computable General Equilibrium Model,” AERC Publications, RP

160, October.

Chia N-C, S. Wahba and J. Whalley (1992), “A General Equilibrium-Based Social Policy

Model for Cote d’Ivoire.” Poverty and Social Policy Series, Washington D.C.: World

Bank.

Dervis, K.J., J. de Melo and S. Robinson (1982), General Equilibrium Models for

Development Policy, Cambridge.

Scarf, H. and J.B. Shoven (ed.) (1984), Applied General Equilibrium Analysis, Cambridge

University Press, Cambridge.



Shoven, J.B. and J. Whalley (1992), Applying General Equilibrium, Cambridge: Cambridge

University Press.

V. ECONOMIC CHOICE UNDER UNCERTAINTY

5. Expected Utility, Risk Aversion, Prospect Theory, Stochastic Dominance & State

Dependent Utility (5 hours)

+J&R Ch 2

+MWG Ch 6

+Barberis, Nicholas C. (2013), Thirty Years of Prospect Theory in Economics: A Review

and Assessment, Journal of Economic Perspectives, Volume 27, Number 1, Winter, pp.

173-196.

+Dercon, Stephan and Pramila Krishnan (2000), “In Sickness and in Health: Risk Sharing

within Households. Journal of Political Economy. 108, pp 688-727.

+Fafchamps, M., C. Udry and K. Czukas (1998), “Drought and Saving in West Africa: Are

Livestock a Buffer Stock?” Journal of Development Economics.55 (2), pp. 273-306.

+Fafchamps, Marcel (1993), “Sequential Labour decisions under Uncertainty: An Estimable

Household Model of West African Farmers.” Econometrica. 61 pp. 1173-98.

+Kahneman D. and A. Tversky (1979), “Prospect Theory: An Analysis of Decision under

Risk,” Econometrica,XLVII pp. 263-291.

+Machina M. (1987), “Choice under Uncertainty: Problems Solved and Unsolved,” Journal

of Economic Perspectives, 1(1), pp.121-54.

Varian Ch 11:5-11:7.

Gravelle and Rees Ch 19-21.

Diamond P. and M. Rothschild (1989) (eds). Uncertainty in Economics: Readings and

Exercises (Revised edition), Academic Press, San Diego.



Hirshleifer, J. and J. Riley (1992), The Analytics of Uncertainty and Information. Cambridge

University Press, Chapter 5.

Johanna Etner, Meglena Jeleva, Jean-Marc Tallon (2012), Decision Theory Under

Ambiguity, Journal of Economic Surveys, Volume 26, Issue 2, pp 234–270, April.

Rosenzweig, M. and H.P. Binswanger (1993), “Credit Market Constraints, Consumption

Smoothing and the Accumulation of Durable Production Assets in Low Income

Countries: Investment in Bullocks in India, Journal of Political Economy, 101(2), pp.

223-44

Rothschild, M. and J. Stiglitz, (1970), “Increasing Risk I: A Definition,” Journal of Economic

Theory, 2, pp.225-43.

Schoemaker Paul J.H (1982), “The Expected Utility Model: Its Variants, Purposes, Evidence

and Limitations. “Journal of Economic Literature. Vol XX (June) pp. 529-563.

Tversky, Amos and Daniel Kahneman (1992), Advances in prospect theory: Cumulative

representation of uncertainty, Journal of Risk and Uncertainty, October, Volume 5,

Issue 4, pp 297-323.

VI. GAME THEORY

Abreu, D, D. Pearce, and E Stachetti (1990), “Towards a theory of discounted repeated games

with imperfect monitoring,” Econometrica 58, pp. 1041-64.

Bernheim, B. D. (1984), “Rationalizable Strategic Behaviour,” Econometrica 52, pp. 1007-

28.

Binmore, K. (2007), Playing for Real - A Text on Game Theory. New York: Oxford

University Press.

Binmore, K. (2008), Game Theory: A Very Short Introduction. Oxford University Press.

Fudenberg, D and E. Maskin (1986), “The folk theorem in repeated games with discounting

or with incomplete information,” Econometrica 54, pp 533-56.

Fudenberg, D. and J. Tirole (1991), Game Theory, MIT Press. Cambridge Mass.Ch 1.1-1.2,

Ch. 6.1-6.5

http://onlinelibrary.wiley.com/doi/10.1111/joes.2012.26.issue-2/issuetoc

http://link.springer.com/journal/11166/5/4/page/1



Gibbons, R. (1992), Game Theory for Applied Economists, Princeton University Press. Ch. 1-

3

Gintis, H (2000), Game Theory Evolving, Princeton University Press; Chs 1-5.

Harsanyi, J. (1967-68), “Games with Incomplete Information played by Bayesian Players,”

Management Science, 14: 159-82; 320-34; 486-502.

Kreps, David (1990) Game Theory and Economic Modelling. Clarendon lectures in

Economics. Oxford: Calrendon Press.

Kreps, David, M., (1990), A Course in Microeconomic Theory Harvester Wheatsheaf New

York.

Osborne Martin J. (2000), Introduction to Game Theory, Oxford University Press.

Pearce, D. (1984), “Rationalizable Strategic Behaviour and the Problem of Perfection,”

Econometrica, 52, pp. 1029-50.

Rasmussen, E (2007), Games and Information: An Introduction to Game Theory 4th Edition,

Blackwell Publishers

Schultz, T. W. (1975), “The Value of the Ability to Deal with Disequilibria,” Journal of

Economic Literature, 13 pp. 827-847.

Von Neumann, J., and O. Morgenstern (1944), Theory of Games and Economic Behaviour

60th Edition (2012) Princeton, N.J: Princeton University Press.

6.1. Static Games of Complete Information (4 hours)

Strategic independence and the concept of a game; players; rules of the game; payoffs;

outcome and strategies; strategic (normal) form representation; dominance, randomized

choices, pure strategy, mixed strategy.

+Gibbons Ch. 1

+J&R Ch. 7

+MWG Ch. 7-8.



Gintis Ch. 1-4

Kreps Ch. 11

6.2 Dynamic Games of Complete Information (4 hours)

Extensive form representation; backward induction, subgame perfection

+Gibbons Ch. 2

+J&R Ch 7

+MWG Ch. 9.

Gintis, H Ch. 6

Kreps Ch. 11-15

6.3 Static Games of Incomplete Information (4 hours)

Bayes Rule; Bayesian Nash Equilibrium; Trembling-hand perfection, Bayesian updating,

subgame perfection.

+Gibbons Ch. 3

+J&R Ch 7

+MWG Ch. 8

Kreps Ch. 14

6.4 Dynamic Games of Incomplete Information (4 hours)

Sequential rationality, Reasonable beliefs and forward induction, Bargaining, auctions and

repeated games.

+Gibbons 4

+J&R Ch. 7



+MWG Ch. 9

Kreps Ch. 15

6.5 Evolutionary Game Theory (2 hours)

+Camerer, C. (2002), Behavioural Game Theory: Experimental Studies of Strategic

Interaction: Princeton: Princeton University Press.

+Carpenter, J. P. (2007), “The Demand for Punishment,” Journal of Economic Behaviour and

Organization. 62, pp. 522-542.

+Bowles, Samuel (2003), Microeconomics: Behaviour, Institutions, and Evolution.

Princeton: NJ. Princeton University Press.



ECON 602: MICROECONOMICS II

A. INTRODUCTION

The main objective of the course is to provide participating graduate students with a

comprehensive understanding of advanced microeconomic theory so that at the end of the

course they will be acquainted with the state of the art in microeconomic analysis. The

students will be equipped to apply the microeconomic concepts and tools in the African

environment. The course is designed for one-semester and will treat microeconomic issues at

an advanced level. The topics covered will include: information economics; welfare

economics and social choice; market failures; market structure and other topics in

microeconomics.

Core Texts:

Mas-Colell, A., M. D. Whinston and J.R. Green (1995), Microeconomic Theory Oxford

University Press. New York. (Henceforth referred to as MWG)

Jehle, G.A. and P. Reny (2011) Advanced Microeconomic Theory 3rd Edition, Prentice Hall

Inc. (Henceforth referred to as J & R)

Supplementary texts:

Bardhan, P. and C. Udry (1999), Development Microeconomics. New York: Oxford

University Press.

Bowles, S (2003), Microeconomics: Behaviour, Institutions, and Evolution. Princeton

University Press.

Campbell Donald E. (2006), Incentives: Motivation and the Economics of information 2nd

edition. Cambridge University Press.

Gravelle, H. and R. Rees (2004), Microeconomics 3rd Edition, Prentice Hall Inc

Kreps, D. M., (1990), A Course in Microeconomic Theory. Harvester Wheatsheaf New York.

Tirole, J. (1991), The Theory of Industrial Organization. Massachusetts: MIT Press.

Varian, Hal. R. (1992) Microeconomic Analysis 3rd Edition, W.W. Norton and Company

New York.



B. DETAILED COURSE OUTLINE

I. INFORMATION ECONOMICS

1.1 Asymmetric Information and Incomplete Markets (2 hours)

+J&R, Ch 8

+MWG Ch. 13, 14

+Kreps Ch. 16-18

+Akerlof, G. (1970) “The Market for Lemons: Qualitative Uncertainty and the Market

Mechanism,” Quarterly Journal of Economics, 84.

+Grossman, S and O. Hart, (1983) “An analysis of the principal-agent problem,”

Econometrica 51, pp. 7-45.

Bolton Patrick, and Mathias Dewatripont (2005), Contract Theory, MIT Press Massachusets.

Mankowski L. and J. Ostroy. (2001), “Perfect Competition and the Creativity of the Market.”

Journal of Economic Literature. Vol. XXXIX (June) 479-535.

Mookherjee, Dilip (1998), “Market Failure and Information,” Ch.2 of Dutta, B.(ed.). Welfare

Economics, Oxford India Paperback. Delhi. pp 28-100.

Stiglitz, J.E. (1998) “Distinguished Lecture on Economics in Government; The Private Uses

of Public Interests: Incentives and Institutions,” Journal of Economic Perspectives,

12, pp. 3-22.

1.2 Adverse selection; signalling (2 hours)

+J&R, Ch 8

+MWG, Ch 13 A-C

+Kreps, Ch 25.9-11

+Bardhan and Udry, Ch 7



+Bardhan, P., S Bowles, and H. Gintis, (2000) “Wealth Constraints, Credit Constraints, and

Economic Performance,” in Atkinson, A. and F. Bourguignon (eds.), Handbook in

Income Distribution, Dortrecht: North Holland.

+Riley, John H. (2001), “Silver Signals: Twenty Five years of Screening and Signalling,”

Journal of Economic Literature. Vol. XXXIX, No. 2, pp. 432-478.

+Spence, A.M. (1973), Job Market Signalling, Quarterly Journal of Economics, 87, pps 355-

74


Milde, H and J.G. Riley (1988), “Signaling in Credit Markets” Quarterly Journal of

Economics 72, pp. 101-29.

1.3 Adverse selection; screening (2 hours)

+J&R Ch 8.

+MWG, Ch 13 D.

+Kreps, Ch 17.2

+Bardhan, P., S Bowles, and H. Gintis (2000) “Wealth Constraints, Credit Constraints, and

Economic Performance,” in Atkinson, A. and F. Bourguignon (eds.), Handbook in

Income Distribution, Dortrecht: North Holland.

+Riley, John H. (2001) “Silver Signals: Twenty Five years of Screening and Signaling,”

Journal of Economic Literature. Vol. XXXIX, No. 2, pp. 432-478.

Bardhan and Udry (relevant chapters)


Rothschild M. and J. Stiglitz (1976), “Equilibrium in Competitive Insurance Markets: An

Essay on the Economics of Imperfect Information,” Quarterly Journal of Economics,

90 (4), pp. 629-649

1.4 Moral Hazard (4 hours)

+J&R, Ch 8



+MWG, Ch 14

+Kreps, Ch.16

+Alderman, Harold and Christen Paxton (1992), “Do the Poor Insure? A Synthesis of the

Literature on Risk Sharing Institutions in Developing Countries.” Policy Research

Working Paper No. 1008, World Bank Policy Research Department, Poverty and

Human Resources Division. Washington, D.C.

+Bardhan, P., S Bowles, and H. Gintis (2000), “Wealth Constraints, Credit Constraints, and

Economic Performance,” in Handbook in Income Distribution. Anthony Atkinson and

Francois Bourguignon eds. Dortrecht: North Holland.

+Besley, T. (1994), “Savings, Credit and Insurance,” in Behrman, J. and T.N. Srinivasan,

(eds.), Hand Book of Development Economics North Holland.

+Bowles, S (2003), Microeconomics: Behaviour, Institutions, and Evolution, Princeton

University Press Ch. 8 and 9

+Coate, S and M. Ravallion (1993), “Reciprocity without Commitment: Characterization and

Performance of Informal Insurance Arrangements,” Journal of Development

Economics 40 (1), pp. 1-24.

+Laffont, J-J. and M. Matoussi (1995), “Moral Hazard, Financial Constraints and

Sharecropping in El Oulja.” Review of Economic Studies. 62, pp. 281-99.

+Udry, C. (1994), “Risk Insurance in a rural credit market: An Empirical Investigation in

Northern Nigeria,” Review of Economic Studies 61 (3), pp. 495-526.

Bardhan and Udry. Ch. 7.

Binswanger, H.P. (1980), “Attitudes towards Risk: experimental measures in rural India,”

American Journal of Agricultural Economics, 62 (August). pp. 395-407.


Cheung, S. (1969), “Transaction Costs, Risk Aversion and the Choice of Contractual

Arrangements,” Journal of Law and Economics, 12, pp. 23-42.

Deaton, A. (1992), “Saving and Income Smoothing in Cote d’Ivoire,” Journal of African

Economies, 1(1), pp. 1 - 24.



Doherty, N.A. and H. Schlesinger (1983), “Optimal Insurance in incomplete Markets,”

Journal of Political Economy, 91, pp. 1045-54.

Fafchamps, M., J.W. Gunning and R. Oostendorp (2000), “Inventories and Risk in African

Manufacturing,” Economic Journal, 110 (2000), pp. 861-893.

Hart, O. and B. Holmstrom (1987), “The Theory of Contracts,” in T. Bewley (ed), Advances

in Economic Theory - Fifth World Congress, Cambridge University Press.

Hoff, K. (1996), “Market Failures and the Distribution of Wealth: A Perspective from the

Economics of Information,” Politics and Society, 24(4), pp. 411-32.

Newbery, D. (1989) “Missing Markets: consequences and Remedies,” in F. Hahn, (ed.) The

Economics of Missing Markets, Games and Information. Clarendon Press.

Pattillo, C. (2000) “Risk, Financial Constraints and Equipment Investment in Ghana: a Firm-

Level Analysis,” in P. Collier and C. Pattillo (eds.), Investment and Risk in Africa,

London: Macmillan, 2000, pp. 96-119.

Pauly, M. (1968), “The Economics of Moral Hazard,” American Economic Review, 58 (3),

pp. 531-537.

Rosenzweig, M. (1988), “Risk, Implicit Contracts and the Family in Rural Areas of Low

Income Families” Economic Journal, 98.

Shavell, S. (1979) “On Moral Hazard and Insurance,” Quarterly Journal of Economics, 93,

pp. 541-62.

Stiglitz, J.E. (1990), “Peer Monitoring and the Credit Markets,” World Bank Economic

Review 4, No 3. pp.251-69.

Stiglitz, J.E. and A. Weiss (1981), “Credit Rationing in Markets with Imperfect Information,”

American Economic Review, 71 (3), pp. 393-410.

Udry, C. (1995), “Risk and Saving in Northern Nigeria,” The American Economic Review, 85

(5), 1287-1300.

1.5 Auctions and Mechanism Design (4 hours)

+J&R, Ch 9



+Kreps, Ch 18

+ MWG, Ch 23

+Bulow, J. and J. Roberts (1989), “The Simple Economics of Optimal Auctions,” Journal of

Political Economy. 97 (5), pp. 1060-1090.

+Klemperer, Paul (1999), Auction Theory: A Guide to the Literature, Journal of Economic

Surveys, 13 (3) pp. 227-86.

+Laffont, J-J and J. Tirole (1987), “Auctioning incentive contracts.” Journal of Political

Economy 95, pp. 921-37

+McAfee, R.P. and J. McMillan (1987), “Auctions and Bidding,” Journal of Economic

Literature 25, pp. 699-754.

+Milgrom, P., and M. Weber (1982), “A theory of auctions and competitive bidding.”

Econometrica 50, pp. 1089-1122.

Aron, Janine (1998) “Policy Rules and Bidding Behaviour in the Ethiopian Foreign Exchange

Auction,” Centre for the Study of African Economies WPS/98-11. (April) Oxford

University.

Bikhchandani, Sushil, (1988), “Reputation in repeated Second-Price Auctions,” Journal of

Economic Theory, 46, pp.97-119.

Bolton Patrick and Mathias Dewatripont (2005), Contract Theory, MIT Press Mass.

Dordunoo, C. K. (1994), “The Foreign Exchange Market and the Dutch Auction System.”

AERC Research Paper Series, RP 24, October

Krishna, Vijay (2002), Auction Theory. New York: Academic Press

Milgrom, P. (1989), “Auctions and Bidding: A Primer,” Journal of Economic Perspectives 3,

pp. 3-22.

Myerson, R. (1979), “Incentive Compatibility and the Bargaining Problem,” Econometrica.

47 (January) pp.61-73.

Myerson, R., and M. Satterthwaite (1983), “Efficient mechanisms for bilateral trading,”

Journal of Economic Theory, 28, pp. 265-281.

Riley, J. and W. Samuelson (1981), “Optimal Auctions,” American Economic Review,



71:381-39.

Tenorio, Rafael (1993), “Revenue Equivalence and Bidding Behaviour in a Multi-Unit

Auction Market: An Empirical Analysis,” Review of Economics and Statistics 75(2),

pp. 302-14.

1.6 Topics in Contract Theory (2 hours)

Bolton Patrick, and Mathias Dewatripont (2005), Contract Theory, MIT Press Mass.

Salanie B. (1997), Contract Theory: A Primer, MIT Press Mass.

Schmitz Patric W (2001), The Hold-up Problem and Incomplete Contracts: A Survey of

Recent Topics in Contract Theory http://mpra.ub.uni-muenchen.de/12565/MPRA

Paper No. 1562.

Chiappori P.A. and B. Salanie (2003), “Testing Contract Theory: A Survey of Some Recent

Work” in Advances in Economics and Econometrics, Vol 1 M, Dewatripont, L.

Hansen and S. Turnovsky eds., Cambridge University Press.

II . WELFARE ECONOMICS AND SOCIAL CHOICE

2.1 Social Choice (5 hours)

+J & R Ch. 6

+MWG Ch. 21

+Arrow, K.J. (1963) Social Choice and Individual Values, 2nd Edition New York: Wiley.

+Sen, A.K. (1995) “Rationality and Social Choice,” American Economic Review, 85, 1995,

pp. 1-24.

+Sen A. (1987), “Social Choice,” in Eatwell et al. A Dictionary of Economics. pp. 382-93.

+Yew-Kwang Ng (1990), Welfare Economics, London: Macmillan, Ch. 5.

Rawls, J. (1999), A Theory of Justice, Oxford University Press

Sen, A.K. (1970), Collective Choice and Social Welfare: North Holland.

http://mpra.ub.uni-muenchen.de/12565/MPRA%20Paper%20No.%201562

http://mpra.ub.uni-muenchen.de/12565/MPRA%20Paper%20No.%201562



Sen, A.K. (2000), “Distributive Justice” in Atkinson, A. and F. Bourguignon (eds.) Handbook

in Income Distribution, Dortrecht: North Holland.

2.2 Preferences Revisited (4 hours)

+J & R Ch. 6

+MWG Ch. 21

+Bowles, S. (2003), Microeconomics: Behaviour, Institutions, and Evolution, Princeton

University Press Ch 3

+Camerer, C & Fehr, E “Measuring social preferences” http://www.unizh.ch/iew/wp

+Fehr, E. and S. Gächter (2000), “Fairness and Retaliation: the economics of reciprocity,”

Journal of Economic Perspectives, 14(3), pp. 159-81.

+Heinrich, J., S. Bowles, R. Boyd, C. Camerer, E. Fehr, H. Gintis, R. McElreath (2001), “In

Search of Homo-Economicus: behavioural experiments in 15 small scale societies”

American Economic Review, 91, pp. 73-78.

+Rabin, M. (1993), “Incorporating Fairness into Game Theory,” American Economic Review,

83:5, pp.1281-302.

+Thaler, R. (2001), “Anomalies.” Journal of Economic Perspectives, 15(1), pp. 219.

Becker, G. (1962), “Irrational Behaviour in Economic Theory,” Journal of Political Economy,

70(1), pp.1-13.

Becker, G. (1996), Accounting for Tastes. Cambridge, Mass: Harvard University Press.

Becker, G. and G. Stigler (1977) “De Gustibus Non Est Disputandum.” American Economic

Review, 67(2), pp. 76-90.

Bowles, S. (1998), Endogenous Preferences: the Cultural Consequences of Markets and Other

Economic Institutions, Journal of Economic Literature, 36 pp. 75 -111.

Bowles, S. and H. Gintis (2000), “Walrasian Economics in Retrospect,” Quarterly Journal of

Economics, 115(4), pp.1411-39.

Camerer, C. (2002), Behavioural Game Theory: Experimental Studies of Strategic

Interaction: Princeton: Princeton University Press.

http://www.unizh.ch/iew/wp



Crawford, V. (2002), “Introduction to Experimental Game Theory,” Journal of Economic

Theory, 104, pp.1-15.

Eckel, C.C. and P.J. Grossman (1998), “Are Women Less Selfish than Men?: Evidence from

Dictatorship Experiments,” Economic Journal, 108, pp. 726-735.

Fehr, E. and S. Gächter (2002), “Altruistic Punishment in Humans.” Nature, 415, pp.137-40.

Hirschleifer, J. (1994), “The Dark Side of the Force,” Economic Inquiry, 32, pp.1-10

Kahneman, D. and A. Tversky (2000), “Choice, Values and Fairness,” Princeton: Princeton

University Press.

Lowenstein, G. (1999), “Experimental Economics from the Vantage Point of Behavioural

Economics.” Economic Journal. 109(453), pp. F23-F34.

Rabin, M. (1998), “Psychology and Economics,” Journal of Economic Literature. 36(1) pp.

11-46.

2.3 Welfare Measurement (2 hours)

+Jha, R. (1998), Modern Public Economics. Routledge

+Slesnick, D. T. (1998), “Empirical Approaches to the Measurement of Welfare,” Journal of

Economic Literature. Vol. XXXVI, (December) pp.2108-65.

+Yew-Kwang Ng (1990), Welfare Economics, Macmillan, London Ch. 5.

Deaton A. (1986), “On measuring Child Costs: With Application to Poor Countries,” Journal

of Political Economy, 94, pp. 720-744.

Deaton, A (1997), The Analysis of Household Surveys: A Microeconometric Approach, World

Bank, Washington, D.C.

Lambert, P. J. (2001), The Distribution and the Redistribution of Income: Mathematical

Analysis. Manchester University Press.

III. MARKET FAILURE

3.1 Public Goods and Externalities (7 hours)



+Bowles, S (2003), Chs 1&4

+MWG Ch. 11.

Varian, Ch. 23-24

Bardhan and Udry, Ch 10

+Arrow, K.J. (1971), “Political and Economic Evaluation of Social Effects and Externalities,”

in Frontiers of Quantitative Economics. M.D. Intriligator ed. Amsterdam: North

Holland, pp.3-23

+Besley, Timothy (1994), “Do Market failures justify interventions in Rural Markets?” World

Bank Research Observer 9 (1), pp. 27-47.

+Jha, R. (1998) Modern Public Economics. Routledge.

Coase, R. (1960), “The Problem of Social Cost,” Journal of Law and Economics 11 (1), 67–

73

Cullis, J. and P. Jones (1998), Public Finance and Public Choice. Oxford: Oxford University

Press.

Lipsey, R.G. and K. Lancaster (1956), “The General Theory of Second Best,” Review of

Economic Studies, 24 (63), pp. 11-33.

Mookherjee, D (1998), “Market Failure and Information Dutta (ed.), Welfare Economics:

Themes in Economics, Oxford India Paperback pp. 28-100.

Pigou, A.C. (1932) Economics of Welfare, MacMillan, London.

3.2 Generalised Increasing Returns (2 hours)

+ Arthur W. B. (1989) “Competing Technologies, Increasing Returns, and Lock-in by

Historical Events.” Economic Journal 99: 116-131.

+Arthur, B. W. (1990), “Positive feedback in the economy,” Scientific American. 262, pp. 92-

99.

+David, P. (1989) “Clio and the Economics of QWERTY.” American Economic Review 75

pp. 332-337



+Young, H.P (1995), “The Economics of Convention,” Journal of Economic Perspectives.

10 (2) Spring, pp. 105-122.

Durlauf, S and Young, P (2001), Social Dynamics, Brookings Institution

Sokoloff, K. and S. Engerman (2000), “Institutions, Factor Endowments and Paths of

Development in the New World,” Journal of Economic Perspectives, 14(3), pp.217-

32.

Arthur, B. (1994), Increasing Returns and Path Dependency in the Economy. Annarbor:

University of Michigan Press.

IV. MARKET STRUCTURE REVISITED

4.1 Firms as Institutions (2 hours)

+Alchian, A. and H. Demsetz (1972), “Production, Information Costs and Economic

Organization.” American Economic Review, 62(5), pp.777-95.

+Williamson, Oliver (1989), “Transaction Costs Economics,” in Schmanlense, R. and

R.Willig (ed.) Handbook of Industrial Organization, Amsterdam; North Holland

+ Tirole, J. (1988), The Theory of Industrial Organization, MIT Press; pp. 15-60.

+Gravelle and Rees Ch 6 and 13.

+Holstrom B. and J. Tirole (1989), “The theory of the firm,” Ch. 2, in Schmanlense, R. and

R.Willig (ed.) Handbook of Industrial Organization, Amsterdam; North Holland.

+Coase, R (1937), The Nature of the Firm, Economica. 4, pp.386-405

+Milgrom, P. and J. Roberts (1988) “Economic Theories of the Firm: Past, Present and

Future.” Canadian Journal of Economics, August. Vol XXI No 3. pp. 444-458.

+Milgrom, P. and J. Roberts (1992), Economics, Organizations, and Management. Prentice

Hall: Chapter 1.

Bigsten, A., P. Collier, S. Dercon, B. Gauthier, J.W. Gunning, A. Isaksson, A. Oduro, R.

Oostendorp, C. Pattillo, M. Soderbom, M. Sylvain, F. Teal and A. Zeufack (2000),

`Contract Flexibility and Conflict Resolution: Evidence from African Manufacturing’,

Journal of Development Studies, 36, pp. 1-37.



Dixit, A. and R. Pindyck (1994), Investment under Uncertainty, Princeton, NJ: Princeton

University Press.

Hart, O. (1985), Firms, Contracts and Financial Structure. Oxford: Oxford University Press.

Pindyck, R., (1988) “Irreversible Investment, Capacity Choice and the Value of the Firm,”

American Economic Review, 78, 1988, pp. 969-985.

Williamson, Oliver (1985), The Economic Institutions of Capitalism. Free Press: New York.

Ch 1-3.

4.2 Imperfect Competition (Oligopoly) (5 Hours)

+J&R Ch.3

+MWG Ch. 12

+Kreps Ch. 10-12

Varian Ch. 15 and 16

+Basu, Kaushik and Clive Bell (1991), “Fragmented Duopoly: Theory and Applications to

Backward Agriculture,” Journal of Developing Economies. 36, pp. 145-65

+ Tirole, J. (1988), The Theory of Industrial Organization, MIT Press. Ch. 5, 6, 7

Baumol, W, Binzar, J., and R. Willig (1982), Contestable Markets and a Theory of Industrial

Structure, San Diego: Harcourt-Brace Jovanovich.

Chamberlain, E. (1933), Theory of Monopolistic Competition, Cambridge, Mass: Harvard

University Press.

Friedman, J. (1982), “Oligopoly Theory,” Ch.11 in K. Arrow and M. Intriligator (eds)

Handbook of Mathematical Economics vol. II, North Holland.

Jacquemin, A. and M. Slade (1989), “Cartels, Collusion and Horizontal Mergers,” Ch.7, in

Schmanlense, R. and R. Willig (eds) Handbook of Industrial Organization,

Amsterdam; North Holland.

Shapiro C. (1989), “The Theory of Oligopoly Behaviour,” Ch. 6 in Handbook of Industrial

Organization Amsterdam; North Holland.



Sheperd, W.G. (1995) “Contestability vs. Competition - once more,” Land Economics, 71(3),

pp. 299-309.

Stigler, G. (1960) “A Theory of Oligopoly,” Journal of Political Economy, 72, pp.44-61.

4.3 The Economics of Regulation and Deregulation (3 hours)

+Laffont, J-J and M. Meleu (1999), “A Positive Theory of Privatisation for Sub-Saharan

Africa.” Journal of African Economies, 8 (AERC supp.) pp.30-67

+Laffont, Jean-Jacques and Jean Tirole (1991), “The Politics of Government Decision

Making: A Theory of Regulatory Capture.” Quarterly Journal of Economics 104 (4).

+Stigler, G.J (1971), “The Theory of Economic Regulation,” Bell Journal of Economics. 2(1)

Spring pp. 3-21.

Beesley, Michael E. (1997), Privatisation, Regulation and Deregulation 2nd Edition,

Routledge.

Laffont, Jean-Jacques (1990), “The New Economics of Regulation Ten Years After.”

Econometrica. May, 62(3) pp. 507-37.

Laffont, Jean-Jacques and Jean Tirole (1993), A Theory of Incentives in Procurement and

Regulation. MIT Press.

Newbery, David M. (2000), Privatisation, restructuring and Regulation of Network Utilities.

Cambridge Massachusetts: MIT Press.

Peltzman S. (1976), “Towards a General Theory of Regulation,” Journal of Law and

Economics. 19 (2) August, 211-48.

Rees (1993), The Economics of Regulation and Public Enterprises, Harvester Wheatsheaf,

Oxford.

Vickers, John and George Yarrow (1989), Privatisation: An Economic Analysis. Cambridge:

MIT:Mass. Ch. 2-4.

Winston, Clifford (1993), “Economic Deregulation: Days of Reckoning for

Microeconomics,” Journal of Economic Literature. September.

4.4 The Economics of Information Technology (2 hours)



+Varian, H. (2001), Economics of Information Technology, Raffaele Mattioli lecture, Bocconi

University. Mimeo

+Economides, N. (1996), “The Economics of Networks” International Journal of Industrial

Organisation. 16(4), pp.673-99.

+David, P. (2002) “Economic Forces in the Co-Evolution of Information Technology and

Intellectual Property Institutions,” Technical Report, Stanford University.

Armstrong, M. (1998), “Network Interconnection in Telecommunications” Economic

Journal. 108, pp.545-64.

Farrell, J. and C. Shapiro (1988), “Dynamic Competition with Switching Costs,” Rand

Journal of Economics. 19, pp.123-137.

Farrell, J. and C. Shapiro (1988), “Optimal Contracts with Lock-in,” American Economic

Review, 79(1), pp.51-68

Newbery, David M. (2000), “Privatisation, restructuring and Regulation of Network

Utilities.” MIT Press.



V. OTHER TOPICS IN MICROECONOMICS

5.1. Intra-Household Allocation of Resources (4 hours)

+Alderman, H et al (1995), “Unitary versus Collective models of the Household: Is Time to

shift the Burden of Proof,” The World Bank Research Observer, 10(1), pp.1-19.

+Bardhan, P. and C. Udry (1999), Development Microeconomics. Oxford: Oxford University

Press, 1999, chs. 2.

+Dasgupta, P. (1993), An Inquiry into Well being and Destitution. Oxford: Oxford University

Press.

+Lundberg, S and R. Pollak (1993), “Separate Spheres Bargaining and the Marriage market,”

Journal of Political Economy, 101(6), pp. 988-1010.

+McElroy, M. and Horny, M. (1981), “Nash Bargained Household Decisions: towards a

generalization of the theory of demand,” International Economic Review, 22 pp. 333-

349.

+Strauss, J. and D. Thomas (1995), “Human Resources: Empirical Modeling of Household

and Family Decisions” in J. Behrman and T.N. Srinivasen (eds.) Handbook of

Development Economics: Volume 3A. Amsterdam: Elsevier Science.

Basu, K. and P.H. Van (1998) “The Economics of Child Labor,” .American Economic

Review, 88.

Bergstrom, T. (1997) “A Survey of Theories of the Family” in M.R Rosenzweig and O. Stark

(eds), Handbook of Population Economics, 1A, Amsterdam: Elsevier

Browning, M. and P.A. Chiappori (1998), “Efficient Intra-household Allocation: a General

Characterization and Empirical Test,” Econometrica, 66, pp. 1241-1278.

Chiappori, Pierre Andre (1992), Collective labour supply and welfare,” Journal of Political

Economy, 100(3), 437-67.

Fortin, B. and G. Lacroix (1997), A test of the unitary and collective models of household

labour supply. Economic Journal, 107(July), 933-55.

Haddad, Lawrence and Thomas Reardon (1993), “Gender Bias in the Allocation of Resources

within the Household in Burkina Faso: A Disaggregated Outlay Equivalent Analysis.”

Journal of Development Studies. 29 (20), pp. 260 – 276.



Haddad, Lawrence, John Hoddinott, and Harold Alderman, (1997), Intra-household Resource

Allocation in Developing Countries: Models, Methods and Policy, Baltimore: Johns

Hopkins University Press.

Hodinnot, John and Lawrence Haddad (1995), “Does Female Income Share Influence

Household Expenditures? Evidence from Cote D’Ivoire.” Oxford Bulletin of

Economics and Statistics.

Juster Thomas F and Frank P. Stafford (1991), The Allocation of Time: Empirical Findings,

Behavioural Models and Problems of measurement,” Journal of Economic Literature.

Vol. XXIX June pp. 471-522.

Mueller, Eva. (1984), “The Value and Allocation of Time in Rural Botswana,” Journal of

Development Economics, May/June15 (123) pp.329-60.

Rosenzweig, Mark (1986) “Program Interventions, Intra-household Distribution and the

Welfare of Individuals: Modelling Household Behaviour,” World Development 14(2),

February, special issue); 233-43.

Thomas, D. (1991), “Intra-household Resource Allocation: An Inferential Approach,” Journal

of Human Resources, 25.

Udry, C. (1996), “Gender, Agricultural Productivity and the Theory of the Household,”

Journal of Political Economy, 104, pp. 1010- 1046.

5.2 Risk, Uncertainty and Social Networks (3 hours)

+Besley, T. and S. Coate (1995), “Group Lending, Repayment Incentives and Social

Collateral.” Journal of Development Economics. 46(1), pp. 1-18.

+Dercon, S. and P. Krishnan (2000), `In Sickness and in Health: Risk-Sharing within

Households in Rural Ethiopia’, Journal of Political Economy, 108, pp. 688-727.

+Durlauf, S. and H.P. Young (2001), Social Dynamics. Cambridge: MIT Press.

+Fafchamps, M. (1992), “Solidarity Networks in Pre-Industrial Societies: Rational Peasants

with a Moral Economy,” Economic Development and Cultural Change, 41(1),

pp.147-74.

+Platteau, J.P. (1995), “A Framework for the Analysis of Patron-Client Ties in Agrarian



Economies,” World Development, 23(5), pp.767-86.

Azam, J.-P., P. Collier and A. Cravinho (1994), ‘Crop Sales, Crop Shortages and Peasant

Portfolio Behaviour: an Analysis of Angola’, Journal of Development Studies, 30, pp.

36-79.

Bardhan, P. (1993), “Analytics of the Institutions of Informal Cooperation in Rural

Development” World Development, 21(4): 633-9.

Ben-Porath, Y. (1980), “The F-Connection: Families, Friends and Firms and the Organization

of Exchange.” Population and Development Review, 6(1), 1-30.

Binswanger, H.P. and J. McIntire (1987), `Behavioural and material determinants of

production relations in land abundant tropical agriculture’, Economic Development

and Cultural Change, 36, pp. 73-99.

Coate, S. and M. Ravallion (1993), “Reciprocity without Commitment: Characterization and

Performance of Informal Insurance Arrangements,” Journal of Development

Economics, 40, pp. 1-24.

de Janvry A., M. Fafchamps and E. Sadoulet (1991), `Peasant Household Behaviour with

Missing Markets: Some Paradoxes Explained’, Economic Journal, 101, pp. 1400-

1417.

Dercon, S. (1998), ‘Wealth, Risk and Activity Choice: Cattle in Western Tanzania’ Journal of

Development Economics, 55 (1), pp. 1-42.

Eswaran, M. and A. Kotwal (1989), “Implications of credit constraints for risk behaviour in

developing economies,” Oxford Economic Papers, 42, pp. 473-82.

Fafchamps, M. (1993), “Sequential Labor Decisions under Uncertainty: an Estimable

Household Model of West-African Farmers,” Econometrica, 61, pp. 1173-1197.

Fafchamps, M., C. Udry and K. Czukas (1998), ‘Drought and Saving in West Africa: Are

Livestock a Bufferstock?’, Journal of Development Economics, 55, pp. 273-305

Grimard, F. (1997) “Household Consumption Smoothing Through Ethnic Ties: evidence from

Cote d’Ivoire,” Journal of Development Economics, 53 (2), pp. 391-422.

Hoff, K., Braverman, A. and J.E. Stiglitz (eds.) (1993) The Economics of Rural Organization:



Theory, Practice and Policy. New York: Oxford University Press; chs. 2, 5, 12, 14,

24-27.

Paxson, C., (1982) “Using Weather Variability to Estimate the Response of Savings to

Transitory Income in Thailand,” American Economic Review, 72, pp. 15-33.

Rosenzweig, M. (1988) “Risk, Implicit Contracts and the Family in Rural Areas of Low

Income Families” Economic Journal, 98, pp. 1148 – 1170.

Stiglitz, J.E. (1974) “Incentives and Risk Sharing in Share Cropping,” Review of Economic

Studies, 41, pp. 219-255.

5.3 Behavioural Economics (3 hours)

+Fehr, E. and S. Gächter (2000), “Fairness and Retaliation: the Economics of Reciprocity,”

Journal of Economic Perspectives, 14(3), 159-81.

+Heinrich, J., S. Bowles, R. Boyd, C. Camerer, E. Fehr, H. Gintis, R. McElreath (2001), “In

Search of Homo-Economicus: behavioural experiments in 15 small scale societies”

American Economic Review, 91, pp. 73-78.

+Rabin, Matthew, and Richard H. Thaler. 2001. "Anomalies: Risk Aversion." Journal of

Economic Perspectives, 15(1), pp. 219-232.

Banarjee A. V. and E. Dulfo (2009), “The Experimental Approach to Development

Economics,” Annual Review of Economics, 1 pp. 151-78.

Becker, G. (1962), “Irrational Behaviour in Economic Theory,” Journal of Political Economy,

70(1), pp.1-13.

Camerer C. (2003), Behavioural Game Theory: Experiments in Strategic Interaction,

Princeton University Press.

Chaudhury N.,J. Hammer, M. Kremer, K. Muralidharan and F.H. Rogers. (2006), “Missing

in Action: Teacher and Health Worker Absence in Developing Countries,” Journal of

Economic Perspectives 20(1) 91-116.

Crawford, V. (2002), “Introduction to Experimental Game Theory,” Journal of Economic

Theory, 104, pp.1-15.

Fehr, E. and S. Gaechter (2002), “Altruistic Punishment in Humans.” Nature, 415, pp.137-40.



Kahneman, D. and A. Tversky (2000), Choice, Values and Fairness, Princeton: Princeton

University Press.

Lowenstein, G. (1999), “Experimental Economics from the Vantage Point of Behavioural

Economics.” Economic Journal. 109(453), pp. F23-F34.

Rabin, M. (1998), “Psychology and Economics,” Journal of Economic Literature. 36 (1), pp.

11-46.