Temple University

Department of Economics


Spring 2011

Economics 1902, Section 001

Principles of Microeconomics (Honors)


MWF 10:00 -- 10:50 AM

Ritter 107

Textbook: Strategies and Games: Theory and Practice, Prajit K. Dutta, MIT Press, 1999


Please scroll down to the material at the bottom of the syllabus for information about course and university policies, contact information, textbook and grading.

Date (Week of) Topic Text Hwk; Due on the date shown
January 19 (W) and January 21 (F)

1)      Production Possibilities Frontier 
                       Production Possibility Frontiers Remarks

 i)        Characteristics

ii)       Benefits from Specialization

iii)     Benefits from Trade

iv)     Supply Curve from the PPF: Opportunity Cost: Individually and Collectively

v)      T, P and N's demand for fish: Marginal Benefit: Individually and Collectively 



January 24 (M), 26 (W), and 28 (F)

2)      Supply and Demand: Supply and Demand: Equilibrium, Taxes, Surpluses and Shortages

i)        Equilibrium

ii)       The gain from trade: Economic Surplus

(a)    Price = Social MC = Social MB

(b)   Consumer Surplus

(c)    Producer Surplus

Schenk on Consumer Surplus

Schenk on Producer Surplus

Total Surplus

Production Possibilities, due January 26

Answer Key

January 31 M, February 2 W, and February 4 F

Monday, January 31, Last Day to Drop

iii)     Inefficiencies and Market Failure
            Price Ceilings and Floor
            Price Ceiling
            Price Floor 
(a)    Taxes: Excise and Ad Valorum
            An example exercise
            Taxes: Who Pays?
            Taxes and Elasticities
(b)   Imperfections on the Supply Side
1.      Monopoly
            A simple example
2.      Labor Mkts

Schenk on floors and ceilings

Schenk on elasticity

Schenk on Monopoly

Price ceilings and floors, due February 4

Answer Key

February 7, February 9 and February 11

(c)    Imperfections in the Goods Offered
1.      Externalities

Schenk on Externalities: Pt 1 and Pt 2

Imperfect Labor market, due February 11

Answer Key

February 14 and February 16

2.      Excludability and Rivalry in Consumption  A Public Goods Exercise
i.         Private Goods,
ii.       Commons Goods,
iii.      Collective Goods and
iv.     Public Goods

The Invisible Hand & Pigou

Public Goods

Commons Goods

Club Goods


Fibonacci Pizza due February 14.

An answer key.

Externalities and Efficiency due February 16

An answer key

February 18, Friday, First mid-term exam


  Fall 2009 Answer Key Part I and Part II
February 21, February 23 and February 25

Game Theory
1)      Introduction

            Introduction to game theory

2)      Solving Games
a)      Dominant Strategies

      Strategic Form games

b) Iterative Elimination of Dominated Strategies

      Dominance Solvability

      Bertrand Competition: An Example of Dominance Solvability

February 28, March 2 and March 4

c) Best Response and Nash Equilibrium

      Nash Equilibrium

Examples: Felix and Oscar  and Pan Pizza and Zero Sum Games

      The Cola Wars

      The Tragedy of the Commons

      Movie Critique A Beautiful Mind

d) Some Classic Strategic Form Games


  Solutions and Equilibria Hwk due on February 28

 Answer Key

March 7, March 9 and March 11

   Spring Break 

March 14, March16 and March 18

1)      Mixed Strategies

a)      An Introduction to Probability Probability Notes

b) Mixed Strategies in Normal Form Games
Mixed Strategies

Mixed Strategy Applications

Mixed Strategy Applications

  1. Battling Brewers
  2. Battle of the Sexes
  3. Monopoly: The Browser Wars

Solution Strategies due on March 14

Key to Solution Strategies

March 21, 23, 25

2)      Extensive Form Games
Solving extensive form games

Kuhn's Theorem

IEDS and Backward Induction

More Backward Induction

Perfect Information in Extensive Form

Poison Pills

a)      Sub-games and sub-game perfection

PlayBox and X-Station

Sub-game perfect equilibrium

Sub-game perfection: George and Gina

Buck's Bolts

b) Threats and Commitments

Soda and dating

Kidnapped by Robert Louis Stevenson

Browser Wars Again



A Practice Problem: Kathie Lee and Frank

Publishing: Lex and Thea

Market Niche

Mixed Strategy Hwk due on March 21

Answer Key  

 Career Decisions: An Extensive Form Game due on March 23

Answer Key

    Hwk Sub-Game Perfection Due on March 25 and Key. Ooops. We decided this would be due on 0401/2011. It turns out that the Raider and Target hwk already due on that day is identical to the one I had here.
March 28, Monday, Second mid-term exam

2nd Exam

March 29, Last Day to Withdraw

March 30 and April 1

1)      Games with Imperfect Incomplete Information

a)      Static
Incomplete Information - - Statics

Another Static Information Example

A prior problem set.  Don't submit this!

  Raider and Target: due on April 1
April 4, April 6 and April 8 b) Dynamic
Incomplete Information  -- Dynamics

The market for lemons

Harry Sells Edith His Car

Amanda Reckonwith Hires Angie O'Plasty


  International Trade due on April 6 and key
April 11, 13 and 15 Auctions
Revelation and Purification

Auctions Glossary

Loretta Mester on Auctions An Excellent Review Article

Vickrey Auctions and Stamps
  Caveat Emptor: Rob R Baron and Bea Ware due April 13
April 18, 20 and 22   Harry and Edith due on April 22
April 25, 27 and 29 Bargaining Notes William Spaniel on Take-it-or-leave-it games.

An All-Pay Auction due on April 27 

Get thekey.

Monday May 2

This is a cushion to give us the time to either finish up or review.

Play and the Evolution of Fairness by Marc Bekoff

Friday, May 6, 8 -10 AM

Final Exam

  Get the 2011 key


831 Ritter Annex

Office Hours:

MWF, 2 PM - 4 PM

University Policies

Academic Freedom, Rights and Responsibilities: Freedom to teach and freedom to learn are inseparable facets of academic freedom. The University has adopted a policy on Student and Faculty Academic Rights and Responsibilities (Policy # 03.70.02) which can be accessed through the following link: http://policies.temple.edu/getdoc.asp?policy_no=03.70.02

Disability Statement: This course is open to all students who meet the academic requirements for participation.  Any student who has a need for accommodation based on the impact of a disability should contact the instructor privately to discuss the specific situation as soon as possible.  Contact Disability Resources and Services at 215-204-1280 in 100 Ritter Annex to coordinate reasonable accommodations for students with documented disabilities.  

Policy on Cell Phones:  Cell phones, pagers and beepers must be turned off during class except with special permission from your instructor.

Attendance Policy:  As you can see from the Class Participation and Course Grading Formulas, attendance is very important to your success in this class.  Absence due to illness still means that you are not participating in class  If you are sick, you will need to provide a note from the doctor.  Students with an emergency (e.g., death in the family, illness, automobile accident) may have an excused absence, but if such absences amount to more than 20% of class hours for the semester, students should consider the possibility of withdrawal from the class.

Plagiarism and Cheating: Temple University believes strongly in academic honesty and integrity. Plagiarism and academic cheating are, therefore, prohibited. Essential to intellectual growth is the development of independent thought and a respect for the thoughts of others. The prohibition against plagiarism and cheating is intended to foster this independence and respect.

Plagiarism is the unacknowledged use of another person's labor, another person's ideas, another person's words, another person's assistance. Normally, all work done for courses -- papers, examinations, homework exercises, laboratory reports, oral presentations -- is expected to be the individual effort of the student presenting the work. Any assistance must be reported to the instructor. If the work has entailed consulting other resources -- journals, books, or other media -- these resources must be cited in a manner appropriate to the course. It is the instructor's responsibility to indicate the appropriate manner of citation. Everything used from other sources -- suggestions for organization of ideas, ideas themselves, or actual language -- must be cited. Failure to cite borrowed material constitutes plagiarism. Undocumented use of materials from the World Wide Web is plagiarism.

Academic cheating is, generally, the thwarting or breaking of the general rules of academic work or the specific rules of the individual courses. It includes falsifying data; submitting, without the instructor's approval, work in one course which was done for another; helping others to plagiarize or cheat from one's own or another's work; or actually doing the work of another person.

Students must assume that all graded assignments, quizzes, and tests are to be completed individually unless otherwise noted in writing in this syllabus.  I reserve the right to refer any cases of suspected plagiarism or cheating to the University Disciplinary Committee; I also reserve the right to assign a grade of "F" for the given paper, quiz or test.