contents
preface

chapter one: An overview
1.1. The basic categories: Actors, behavior, institutions, and equilibrium
1.2. The purpose of microeconomic theory
1.3. Scope, detail, emphasis, and complexity
1.4. A précis of the piot

part I: Individual and social choice
chapter two: The theory of consumer choice
and demand
Prologue to part I
2.1. Preferences and choices
2.2. Marshallian demand without derivatives
2.3. Marshallian demand with derivatives
2.4. Aggregate demand
2.5. Bibliographic notes
2.6. Problems
chapter three: Choice under uncertainty
3.1. Von Neumann-Morgenstern expected utility
3.2. On utility for money
3.3. Applications to market demand
3.4. States of nature and subjective probability
3.5. Problems with these modeis
3.6. Normative applications of the theory
3.7. Bibliographic notes
3.8. Problems
chapter four: Dynamic choice
4.1. Optimal dynarnic strategies
4.2. Menus and meals
4.3. Bibliographic notes and discussion
4.4. Problems
chapter five: Social choice and efficiency
5.1. The problem
5.2. Pareto efficiency and optimality: Definitions
5.3. Benevolent social dictators and social welfare functionals
5.4. Characterizing efficient social outcomes
5.5. Social choice rules and ArroWs possibility theorem
5.6. Bibliographic notes
5.7. Problems

part II: The price mechanisin
chapter six: Pure exchange and
general equilibrium
Prologue to part II
6.1. Pure exchange and price equilibrium
6.2. Why (not) believe in Walrasian equilibrium?
6.3. The efficiency of a general equilibrium
6.4. Existence and the number of equilibria
6.5. Time, uncertainty, and general equilibrium
6.6. Bibliographic notes
6.7. Problem
chapter seven: The neoclassical firm
7.1. Models of the flrm's technological capabffities
7.2. The profit function
7.3. Conditional factor demands and cost functions
7.4. From profit or cost functions to technology sets
7.5. Cost functions and -runs
7.6. Bibliographic notes 259 7.7. Frobiems
chapter eight: The competitive firm and
perfect competition
8.1. A perfectly competitive market
8.2. Perfect competition and -runs
8.3. What's wrong with partial equilibrium analysis?
8.4. General equilibrium with ftrms
8.5. Bibliographic notes
8.6. Problems
chapter nine: Monopoly
9.1. The standard theory
9.2. Maintaining monopoly
9.3. Multigood monopoly
9.4. Nonlinear pricing
9.5. Monopoly power?
9.6. Bibliographic notes
9.7. Problems
chapter ten: Imperfect competition
10.1. The classic modeis of duopoly
10.2. Bibliographic notes and discussion
10.3. Problems

part III: Noncooperative game theory
chapter eleven: Modeling competitive
situations
Prologue to part III
11.1. Carnes in extensive form: An example
11.2. Carnes in extensive form: Formalities
11.3. Carnes m normal or stategic form
11.4. Mixed strategies and Kuhn's theorem
11.5. Bibliographic notes
11.6. Problems
chapter twelve: Solution concepts
for noncooperative games
12.1. Opening remarks
12.2. Dominance and iterated dominance for normal form games
12.3. Backwards induction in games of complete and perfect information
12.4. Nash equilibrium
12.5. Equilibria in mixed strategies
12.6. Why might there be an obvious way to play a given game?
12.7. Refinements of Nash equilibrium
12.7.1. Weak dominance
12.7.2. Subgame perfection (and iterated
weak dominance)
12.7.3. Sequential equilibrium
12.7.4.Restrictions on out-of-equilibrium beliefs
12.7.5. Trembling-hand
Perfection
12.7.6. Proper equilibria and stable sets of equilibria
12.8. Reprise: Classic duopoly
12.9. Bibliographic notes
12.10. Problems
chapter thirteen: Incomplete information
and irrationality
13.1. Games of incomplete information
13.2. An application: Entry deterrence
13.3. Modeling irrationality
13.4. More on refinements: Complete theories
13.5. Bibliographic notes
13.6. Problems
chapter fourteen: Repeated play:
Cooperation and reputation
14.1. The prisoners' dilemma
14.2. Repeating games can yield cooperation: The folk theorem
14.3. Noisy observables
14.4. Implicit coilusion in oligopoly
14.5. Reputation
14.6. Reputation redux: Incomplete information
14.7. Bibliographic notes
14.8. Problems
chapter fifteen: Bilateral bargaining
15.1. Simultaneous offers and indeterminancy
15.2. Focal equffibria
15.3. Rubinstein's model
15.4. The experimental evidence about alternating offers
15.5. Modeis with incomplete information
15.6. Bibliographic notes
15.7. Problems

part IV: Topics in information economics
chapter sixteen: Moral hazard and incentives
Prologue to part IV
16.1. Introduction
16.2. Effort incentives: A simple example
16.3. Finitely many actions and outcomes
16.4. Continuous actions: The first-order approach
16.5. Bibliographic notes and variations
16.6. Problems
chapter seventeen: Adverse selection
and market signaling
17.1. Akeriof's model of lemons
17.2. Signaling qualit
17.3. Signaling and game theory
17.4. Bibliographic notes and discussion
17.5. Problems
chapter eighteen: The revelation principie
and mechanism design
18.1. Optimal contracts designed for a single party
18.2. Optimal contracts for interacting parties
18.3. The pivot mechanism
18.4. The Gibbard-Satterthwaite theorem
18.5. Bibliographic notes
18.6. Problems

part V: Firms and transactions
chapter rnneteen: Theories of the firm
19.1. The flrm as a profit-maximizing entity
19.2. The firm as a maxiniizing entity
19.3. The flrm as a behavioral entity
19.4. Firms in the category of markets
19.5. Bibliographic notes
19.6. Problems
chapter twenty: Transaction cost economics
and the firm
20.1. Transaction cost economics and firms
20.2. Mathematical modeis of transaction cost economics
20.3. Bibliographic notes
postscript
appendix one: Constrained optimization
A1.1. A recipe for solving problems
A1.2. The recipe at work: An example
A1.3. Intuition
A1.4. Bibliographic notes
A1.5. Problems
appendix two: Dynamic programniing
A2.1. An example with a finite horizon
A2.2. Finite horizon dynamic programming
A2.3. An example with an infinite horizon
A2.4. Stationary Markov decision problems
A2.5. Bibliographic notes and discussion
A2.6. Problems
addendum to the second and
subsequent printings
index