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Microeconomic Theory

Andreu Mas-Colell, Michael D. Whinston, and Jerry R. Green

Publication Date - 15 June 1995

ISBN: 9780195073409

1008 pages
7-7/8 x 10 inches

In Stock


Many instructors of microeconomic theory have been waiting for a text that provides balanced and in-depth analysis of the essentials of microeconomics. Masterfully combining the results of years of teaching microeconomics at Harvard University, Andreu Mas-Colell, Michael Whinston, and Jerry Green have filled that conspicuous vacancy with their groundbreaking text, Microeconomic Theory.
The authors set out to create a solid organizational foundation upon which to build the effective teaching tool for microeconomic theory. The result presents unprecedented depth of coverage in all the essential topics, while allowing professors to "tailor-make" their course to suit personal priorities and style. Topics such as noncooperative game theory, information economics, mechanism design, and general equilibrium under uncertainty receive the attention that reflects their stature within the discipline. The authors devote an entire section to game theory alone, making it "free-standing" to allow instructors to return to it throughout the course when convenient. Discussion is clear, accessible, and engaging, enabling the student to gradually acquire confidence as well as proficiency. Extensive exercises within each chapter help students to hone their skills, while the text's appendix of terms, fully cross-referenced throughout the previous five sections, offers an accessible guide to the subject matter's terminology. Teachers of microeconomics need no longer rely upon scattered lecture notes to supplement their textbooks. Deftly written by three of the field's most influential scholars, Microeconomic Theory brings the readability, comprehensiveness, and versatility to the first-year graduate classroom that has long been missing.


"Clear, comprehensive, and deep! The authors' treatment is both contemporary and probing, covering all aspects of modern microeconomic theory at a level accessible to graduate students, and which goes beyond simple statement of results to underscore the underlying intuition. This text should be a standard for graduate study in microeconomics!"--Lars Stole, University of Chicago

"An excellent, comprehensive text."--Michael Jerison, SUNY at Albany

"Broader and deeper than any graduate microeconomics textbook I know."--Rajeev Dehejia, Harvard

"Outstanding! The choice of topics, coverage, and degree of sophistication is perfect for a first-year graduate theory sequence."--Glenn MacDonald, W.E. Simm Graduate School of Business

"Extremely helpful as a teaching aid in a first year graduate theory course. It covers a great deal of material, motivating the material with informal discussion yet presenting it compactly and rigorously, with illuminating diagrams and formal examples. There is also a wealth of interesting homework problems."--Truman F. Bewley, Yale University

Table of Contents

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