Microeconomics II

Course type

IWH-DPE Foundation Course, CGDE First-year Course

Lecturers

Dennis Hutschenreiter, PhD (IWH) and Professor Sebastian Schweighofer-Kodritsch, PhD (Leipzig University – starting in October 2025)

Summary

This is the second course of the first-year triple sequence in Microeconomics.

The first half of the course introduces fundamental concepts in noncooperative game theory. Students learn to model and analyse strategic situations in static, dynamic, and incomplete information settings, with applications across economics, finance, and related fields. Topics include core solution concepts, equilibrium refinements, and Bayesian Nash Equilibrium.

In the second half, students will learn about two main areas of applications of mechanism design and game theory, respectively, namely auctions and bargaining. With auctions, the course will introduce the main auction formats and their theoretical properties for the case of independent private values, as well as general theoretical results (revelation principle, revenue equivalence, optimal auctions). Additional issues under common values, as well as selected applications and recent developments will be presented. With bargaining, the course will introduce both the cooperative/axiomatic and non-cooperative/strategic approach to bargaining, and the fundamental results under each approach for the case of complete information. Additional issues and approaches for incomplete-information bargaining, as well as selected applications and recent developments will be presented. An important element of the first part, with both auctions and bargaining, will be related experiments (approaches and evidence), including classroom experiments.

Schedule

08.12.2025          10:30-12:00 and 13:00-14:30      IWH, Leipziger Str. 100, 3rd floor, Conference Room
12.01.2026          10:30-12:00 and 13:00-14:30      IWH, Leipziger Str. 100, 3rd floor, Conference Room
26.01.2026          10:30-12:00 and 13:00-14:30      IWH, Leipziger Str. 100, 3rd floor, Conference Room
09.02.2026          10:30-12:00 and 13:00-14:30      IWH, Leipziger Str. 100, 3rd floor, Conference Room

Content

1. Games in Normal Form
2. Games in Extensive Form
3. Games with Incomplete Information
4. Auctions
5. Bargaining
6. Experiments

Course requirements

Attendance at all lectures is mandatory and a prerequisite to submit solutions for the assignments.

Following each session, students will receive a problem set which they need to solve within two weeks. Course completion requires passing a minimum of three out of four assignments.

Required Reading

1. Games in Normal Form

Mas-Colell, A., Whinston, M. D. & Green, J. R. (1995). Microeconomic theory. Volume 1. New York: Oxford University Press. Chapters 7 and 8.

Osborne, M.J. & Rubinstein, A. (1994). A Course in Game Theory. 1^st Edition. MIT Press.

2. Games in Extensive Form

Mas-Colell, A., Whinston, M. D. & Green, J. R. (1995). Microeconomic theory. Volume 1. New York: Oxford University Press. Chapter 9.

Osborne, M.J. & Rubinstein, A. (1994). A Course in Game Theory. 1^st Edition. MIT Press.

3. Games with Incomplete Information

Mas-Colell, A., Whinston, M. D. & Green, J. R. (1995). Microeconomic theory. Volume 1. New York: Oxford University Press. Chapter 8.E.

Osborne, M.J. & Rubinstein, A. (1994). A Course in Game Theory. 1^st Edition. MIT Press.

4. Auctions

Breitmoser, Y. & Schweighofer-Kodritsch, S. (2022). Obviousness around the clock. Experimental Economics, 25(2), 483-513.

Kagel, J. H. & Levin, D. (2015). Auctions: A Survey of Experimental Research. In The Handbook of Experimental Economics Volume 2, edited by John H. Kagel and Alvin E. Roth, Princeton University Press. Chapter 9, 563–637.

Krishna, V. (2010). Auction Theory. 2^nd Edition. Elsevier. Chapters 1-6.

5. Bargaining

Kim, J., Lim, W. & Schweighofer-Kodritsch, S. (2024). Patience is power: Bargaining and payoff delay. Mimeo.

Osborne, M. & Rubinstein, A. (1990). Bargaining and Markets. Academic Press. Chapters 1-5.

Roth, A. E. (1995). Bargaining Experiments. In The Handbook of Experimental Economics, edited by John H. Kagel and Alvin E. Roth, Princeton University Press, Chapter 4, 253–348.

Schweighofer‐Kodritsch, S. (2018). Time preferences and bargaining. Econometrica, 86(1), 173-217.

Schweighofer-Kodritsch, S. (2022). The bargaining trap. Games and Economic Behavior, 136, 249-254.

6. Experiments

Barron, K., Ditlmann, R., Gehrig, S. & Schweighofer-Kodritsch, S. (2025). Explicit and implicit belief-based gender discrimination: A hiring experiment. Management Science, 71(2), 1600-1622.

Camerer, C. F. (2003). Behavioral Game Theory: Experiments in Strategic Interaction. Princeton University Press, Chapters 1-5.

Registration

Please register for the course until November 30, 2025 by sending an e-mail to cgde@iwh-halle.de.