Syllabus i4l57

Economics 1011a: Intermediate Microeconomics Meeting Time: 11:30-1:00 Tuesday and Thursday in Jefferson Lab 250

Professor: Edward Glaeser [email protected]

TFs: Jonathan Hall (Head TF) [email protected] Please email your TF (and not Jonathan) regarding any Qs on course material.

Course-Wide Review Sessions: To be held on Fridays, in Jefferson 250 (1-2:30). One of the TFs will go through some of the material covered in lecture during the week. These are not mandatory sessions, but we have found that many people appreciate another look at the material.

Office Hours: Prof. Glaeser: Wed 2-4pm (in Taubman 344, at the Kennedy School). By Appointment Only. To schedule, : Erin Dea, 617.495.5140 Tom: Monday 6-7 Loukas Thursday 4:15-5:15 Jean Monday 1:30-2:30 Andrey Monday 6:30-7:30

1) Requirements of the Course a. Attendance is not taken, but Prof. Glaeser does ask questions and expects you to participate. This could make a difference in your grade if you are right on the borderline. b. Readings -- The textbook (Nicholson, Microeconomic Theory: Basic Principles and Extensions (any edition)) is intended primarily as a reference – i.e., a place to turn for assistance with concepts you may be struggling with. The lectures do not follow it in any systematic way. c. Problem Sets. There will be nine. Feel free to do them tly in groups (see also role of TFs under office hours policy). • Problem sets will be available online on Thursdays after class, and then due on the following Tuesdays at 5 pm in your

TF’s mailbox in Littauer. Please do not hand in problem sets during lecture. Late problem sets will not be accepted. Your lowest graded problem set will be dropped (hence, you can skip one problem set). • Problem Sets will be graded out of {check, check-,0} • You are encouraged to work with others on the problem sets. However, people working together should not turn in identical problem sets, which would result in a grade of -. d. Mid: To be done alone, in class, tentatively on October 10 and November 13. e. Grading: 15% Problem Sets, 35% Mid, 50% Final. f. Disagreement About Grades Policy: • If we have miscounted points on the midterm or final, tell us immediately and we will correct. If there is a clear mistake grading a math problem, your TF. Beyond this, if you think that we have inappropriately scored an answer submit a complaint in writing (typed). Prof. Glaeser will then regrade your test from beginning to end. As he is much tougher than the TFs, generally this means that your grade will go down, but still you should feel free to submit complaints. There is no regrading of problem sets.

2) Office Hour Policy a. The TFs should be your primary . • Prof. Glaeser is delighted to meet with you. However, you should (1) make an appointment (see above) to meet during office hours, and (2) make sure that you want to talk about economic substance. Discussing economic puzzles with you (i.e. why people vote, why fertility is low in Europe, etc.), but not discuss what is going to be on the midterm, why you got a low grade on your problem set, etc.

b. Help on the Problem Sets: • The TFs have been instructed to provide only limited ex ante assistance on the problem sets. This is not because they are lazy or mean, nor is it meant to frustrate you (although many of you will likely find it frustrating). It is our philosophy that you will get more out of the course by struggling with the material. Do not interpret this to mean that you should not ask your TF questions or attend their office hours! Quite the opposite -- every one of you should have a close relationship with your TF. They are a valuable resource that you will need to utilize. Just don’t show up at their office hours expecting them to do the work for you.

3) Lunches with Prof. Glaeser a. Prof. Glaeser will be having lunches with (up to 8) students Wednesdays at noon at John Harvard’s. b. Up to three lunches will be free – then you have to pay. c. To sign up email [email protected].

4) Prerequisites a. This is the hard core, boot camp, track of intermediate microeconomics.

• It should be both hard and fun. b. Math Requirements: Multivariable Calculus. • If you are not comfortable with calculus— do not take this course. We will not spend time in lecture explaining the difference between a total and a partial derivative. • Higher math (analysis, etc.) is not necessary and this is far from a math course. • You need to be very comfortable with derivatives and integrals, which are the core of economics. c. Course Prerequisites: • You should have taken either AP Ec or Ec 10. • If not, you must be quite strong in math (e.g., you are a physics, applied math, or math major). • (Hint: if you aren’t a math jock, try to work with someone who is on the problem sets).

5) What Should You Learn From This Course? How to sensibly model any real world phenomenon/puzzle. This skill is the core skill in economics. Usually, undergraduates never learn it and get a watered down version of economics. You still have that option— take the other course. However, this is Harvard, and you should have the option of taking an economics course that pushes you.

6) Tentative Schedule of Lectures September 16: Lecture 1: Introduction. Course information, modeling labor supply September 18: Lecture 2: Modeling and Firms. Mathematics of Optimization, Firm profit September 23: Lecture 3: Firms with Multiple Variables. Returns to Scale, SR v LR September 25: Lecture 4: More on Firms. Envelope Theorem, Cost Minimization September 30: Lecture 5: Consumer Behavior. Preferences and Utility. October 2: Lecture 6: More on Consumers. Lagrangians, Expenditure Function October 7: Lecture 7: The Slutsky Equation: Marshallian v Hicksian Demand, good types October 9: Lecture 8: Consumption over Time: Discounting, Separability October 10: Midterm #1 October 14: Lecture 9: Consumption and Investment: Multiple Investment Technologies October 16: Lecture 10: More on Consumption: Multiple Periods, Behavioral Economics October 21: Lecture 11: Choice Under Uncertainty: Expected Utility, Insurance October 23: Lecture 12: More on Uncertainty: Lotteries, Risk Aversion October 24: Lecture 13: Compensating Variation: Arbitrage, Urban Economics October 28: Lecture 14: Aggregation of Supply and Demand: Production with Entry October 30: Lecture 15: General Equilibrium 1: Prices, Consumer Surplus November 4: Lecture 16: General Equilibrium 2: Exchange Economies, Welfare Thms. November 6: Review Lecture

November 11: Veterans’ Day November 13: Midterm #2 November 18: Lecture 17: Market Failures: Externalities, Public Goods November 20: Lecture 18: Monopoly and Oligopoly: Cournot Competition November 25: Lecture 19: Game Theory: Nash Equilibrium, Mixed Strategies November 27: No Class: Thanksgiving. December 2: Lecture 20: Sequential Games: Subgame Perfection December 4: Lecture 21: Adverse Selection: Bayesian Equilibrium, Signaling Equilibria December 9: Lecture 22: Moral Hazard: Insurance, Wages December 11: Lecture 23: Political Economy of Hatred December 16: Lecture 24: Cities, Productivity, and Housing