Course Calendar | ECON 502

COURSE OUTLINE & Calendar

Note: Topics & Timing Are Subject to Change

Section I: The Fundamentals of the Microeconomic Approach to Decisions

Week 1 (Aug 26) Administration & Consumer Optimization 1

1. Class Administration

2. Why Theory?
3. How micro is micro?
4. A Quick Math Primer

5. Consumer Constrained Optimization

Supplements: Week 1 PPT
Wolfram Alpha; Mathematica (available for download or in some labs)

Basic Calculus (Dummies)

Week 2 (Sept 2) Consumer Optimization 2

Quiz (Covering Reading for Week 2 + Week 1 Lecture Material)

Readings: Consumer's Constrained Choice (Chapter 3 esp. Section 3.4)

1. Review of Basic Consumer Optimization Concepts

2. Variations on Constraints

3. Recognizing & Modeling Tradeoffs

4. Variations on Preferences

Supplements: PPT Week 2 Consumer Optimization for Dummies

Puzzle: Why does U.S. spend so much on health care? (Random Critical Analysis)

Puzzle: Why so few G-rated, so many R-rated movies given relative profitability?

Week 3 (Sept 9) Variations & Issues of Microeconomic Optimization Problems

Quiz (Covering Week 3 Reading + Week 2 Lecture Material)

Readings: Why Do Europeans Work More Than Americans (MN Fed)

1. Review of Consumer Optimization Basics

2. Optimization with uncertainty multi-periods, multi-markets, & uncertainty

3. Optimization with Household Production, Human Capital, & "Z-Goods"

4. Questions & Evidence Regarding the Empirical Validity of Optimization Models

Student Presentation: Framing Insurance Choices + CGSB Overview

Supplements: PPT Week 3 Dynamic Optimization with Lagrangian
Lancaster Model in Preaching & Politics
Dynamic Optimization with Bellman Equation (for the math curious)

DSGE Solution Strategies (for the math curious)

Puzzle: Why do NFL coaches go for 4th down so infrequently? Going for 4th Down

Week 4 (Sept 16) Decision-Making in Strategic Settings

Quiz (Covering Week 4 Reading + Week 3 Lecture Material)

Readings: Ten Strategic Game Examples + Intro to Game Theory (p. 1-25)

1. Key Concepts in Modeling Strategic Decisions

2. Examples of Common Strategic Decision Settings

3. Solution Concepts in Strategic Decisions

Supplements: PPT Week 4

Student Presentation: Problems of Medical Residency Matching + GCSB Review

Week 5 (Sept 23) Producer Optimization

Quiz (Covering Week 6 Readings & Week 5 Lecture Material )

Readings: Production Functions Revenue & Cost Functions Profit Max for Dummies

1. Review of Consumer Optimization Concepts

2. Key Concepts of Production, Cost, and Revenue

3. Basic Producer Optimization Models

(Future) Student Presentation: Value of NCAA Players

Supplements: PPT Week 5

Week 6 (Sept 30) Exam 1

Section II: Applications & Extensions of Theory

Week 7 (Oct 7) Supply & Demand: Bridging Theory & Data

Quiz (Covering Week 7 Reading)

Readings: Fulton Fish Market (JEP) Uber Elasticity & Consumer Surplus (Levitt et al.)

1. Basic Supply & Demand Concepts

2. Going from Theory to Data in Estimating Supply-Demand Models

3. Pricing Practices & Relationship to Pricing Models

Student Presentations: An Economist Sells Bagels (Levitt -- NBER Version)

Supplemental: PPT Week 7
Granular Shocks to Identify S&D (Gabaix) Elasticity from Demand Function

Arb & LOP

Asymmetry in Retail Gasoline Prices (FTC) (More Background: STL Fed)

Puzzles: Why lower beer prices on July 4, lower TV prices on Super Bowl weekend?

Why do gasoline prices rise faster than they fall?

Week 8 (Oct 14) Dimensions of Competition: Pricing & Otherwise

Quiz (Covering Week 8 Reading + Week 7 Lecture Material)

Readings: Whole Foods District Court Opinion (pp. 4-15 + Section V parts A-D)
Personalized Pricing CGSB Review

1. Basic Economic Theory of Market Structure & Pricing

2. Price Discrimination

2. More Complex Dimensions of Pricing & Competition

Student Presentations: Demand for Niche Products Growing (NBER) + CGSB Review Synopsis

Supplemental: PPT Week 8
1997 DOJ/FTC Merger Guidelines 20 Years of Merger Guidelines

Price Targeting in Smartphones (Dube et al -- NBER) Personalized Pricing (Detailed paper)
Five Facts about Prices (Nakamura - QJE)
Entry/Exit & Mergers (AER Wollman) + CGSB Review Synopsis

Puzzles? Why do econ pricing studies often show price inflexibility when daily/weekly prices change a lot?
Why is the national concentration of firm share in markets rising while local is falling?

Week 9 (Oct 21) More Applications/Extensions of Pricing & Cost Models

Quiz (Covering Week 9 Reading & Week 8 Lecture Material)

Readings: The Costs of Exchange (Coase Institute) Cable Pricing (Attention to Sections I.B, II, III.C, IV, V.A)

1. Decomposing Transactions Costs & Their Impact (Tomorrow 3.0)
2. Firm Responses to Consumer "Transactions Costs" (SW Bell; Availability; Smoothing; Rounding)
3. Fixed Costs & Impact on Pricing

4. Uncertainty & Pricing/Intertemporal Pricing

Student Presentations: Geography of Brands (JPE) + CGSB Review Synopsis

Supplemental: PPT Week 9 Transactions Costs Basics

Optimal Intertemporal (Carlton MA Student) CGSB Pricing Single Serve Coffee

Puzzle: Why LOP on gold but not burgers?

Week 10 (Oct 28) Information & Incentives

Quiz (Covering Week 10 Readings + Week 9 Lecture Material)

Quiz (Covering Week 11 Readings + Week 10 Lecture Material)

Reading: Asymmetric Information (textbook)

1. Basic Models of Hidden Actions & Hidden Attributes

2. Market/Managerial Responses
3. Filters & Problems (Navy Seals)

4. Economics of "24" & "Sully" -- Rules v. Discretion