This text in microeconomics focuses on the strategic analysis of markets under imperfect competition, incomplete information, and incentives. Part I of the book covers imperfect competition, from monopoly and regulation to the strategic analysis of oligopolistic markets. Part II explains the analytics of risk, stochastic dominance, and risk aversion, supplemented with a variety of applications from different areas in economics. Part III focuses on markets and incentives under incomplete information, including a comprehensive introduction to the theory of auctions, which plays an important role in modern economics. Each chapter introduces the core issues in an accessible yet rigorous fashion, and then investigates specialized themes. Each also offers self-contained explanations and proofs. The only prerequisites are a basic knowledge of calculus and probability, and familiarity with intermediate undergraduate microeconomics. The text can be used as a textbook in different courses for senior undergraduate or first-year graduate students.
• World-class text on hot topics in microeconomics: imperfect competition, uncertainty, incomplete information, incentives • In-depth, self-contained treatment of core topics • Includes problems, bibliographic notes, technical appendices
Part I. Imperfect Competition: 1. Monopoly; 2. Regulation of monopoly; 3. Oligopoly and industrial organization; Part II. Risk, Stochastic Dominance and Risk Aversion: 4. Stochastic dominance: theory; 5. Stochastic dominance: applications; 6. Risk aversion; Part III. Incomplete Information and Incentives: 7. Matching: the marriage problem; 8. Auctions; 9. Hidden information and adverse selection; 10. Hidden information and signaling; 11. Hidden action and moral hazard; 12. Rank-order tournaments; Part IV. Technical Supplements: A. Nonlinear optimization: the classical approach; B. Inequality Constrained optimization; C. Convexity and generalizations; D. From expected values to order statistics.
'Wolfstetter succeeds admirably in his goal of illustrating the great breadth and power of modern microeconomics. He effectively presents some of the most important applications of the theory and also provides the reader with a sound understanding of the underlying mathematical foundations. The author has a wonderful knack for explaining subtle ideas simply and clearly.' John G. Riley, UCLA
'Wolfstetter provides comprehensive and valuable reviews of a number of important cutting edge topics in economics … His chapter on auctions is one of the most comprehensive in terms of coverage that I have seen. I strongly recommend it as an introductory survey to any student interested in the topic.' John Kagel, University of Pittsburgh
'This book provides an ideal incentive to master the theory of incentives itself, contemporary industrial organization and auction theory. There is no alternative work that gathers together this vital material with sugar rigor, humor, and range of inquiry.' Murray Brown, SUNY - Buffalo
'Wolfstetter has done an excellent job in making the theoretical literature accessible to a student audience. This is a highly readable and balanced account of the new topics in economic theory.' Motty Perry, Hebrew University