New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Economic Theory

by: Dr. Janiya Bernier

Economic Theory ECON 101A

Dr. Janiya Bernier

GPA 3.77

S. Dellavigna

Almost Ready


These notes were just uploaded, and will be ready to view shortly.

Purchase these notes here, or revisit this page.

Either way, we'll remind you when they're ready :)

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

S. Dellavigna
Class Notes
25 ?




Popular in Course

Popular in Economcs

This 21 page Class Notes was uploaded by Dr. Janiya Bernier on Thursday October 22, 2015. The Class Notes belongs to ECON 101A at University of California - Berkeley taught by S. Dellavigna in Fall. Since its upload, it has received 25 views. For similar materials see /class/226700/econ-101a-university-of-california-berkeley in Economcs at University of California - Berkeley.


Reviews for Economic Theory


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 10/22/15
Economics 101A Lecture 23 Stefano DellaVigna April 21 2009 Outline 1 Dynamic Games 2 Oligopoly Stackelberg 3 General Equilibrium Introduction 4 Edgeworth Box Pure Exchange 1 Dynamic Games 0 Nicholson Ch 8 pp 255 266 better than Ch 15 pp 449 454 9th 0 Dynamic games one player plays after the other 0 Decision trees Decision nodes Strategy is a plan of action at each decision node 0 Example battle of the sexes game She He Ballet Football Ballet 21 00 Football 00 12 0 Dynamic version she plays first o Subgame perfect equilibrium At each node of the tree the player chooses the strategy with the highest payoff given the other players strategy 0 Backward induction Find optimal action in last pe riod and then work backward 0 Solution 0 Example 2 Entry Game 1 2 Enter Do not Enter Enter 1 1 100 Do not Enter 05 00 0 Exercise Dynamic version 0 Coordination games solved if one player plays first 0 Can use this to study finiter repeated games 0 Suppose we play the prisoner s dilemma game ten times 1 2 D ND D 4 4 1 5 ND 5 1 2 2 o What is the subgame perfect equilibrium o The result differs if infinite repetition with a proba bility of terminating 0 Can have cooperation 0 Strategy of repeated game Cooperate ND as long as opponent always co operate Defect D forever after first defection 0 Theory of repeated games Econ 104 2 Oligopoly Stackelberg o Nicholson Ch 15 pp 543 545 better than Ch 14 pp 423 424 9th 0 Setting as in problem set 0 2 Firms 0 Cost Cy 2 cy with c gt O 0 Demand pY a bY with a gt c gt O and bgt0 0 Difference Firm 1 makes the quantity decision first 0 Use subgame perfect equilibrium Solution Solve first for Firm 2 decision as function of Firm 1 decision rnygx a by2 byiquot y2 cy2 Foca 2by 2quot by lk c O Firm 2 best response function a c 341 2b 239 y2 o Firm 1 takes this response into account in the max im ization my xw by1 bka y1y1 Cyl or b W D max a c yl 91 2b 2 91 91 oFoc a 2by1 by1 CO or a c and 0 Total production c a Y5y1ltygt2k3T Price equals blt3a cgt 1 3 a a c p 4 b 4 4 0 Compare to monopoly a c yM 2b and ac PM 2 0 Compare to Cournot ygtk gtlt 2265C D y1y2 3b and 1 2 a c 131 3 3 Compare with Cournot outcome Firm 2 best response function 24 2 2b Firm 1 best response function a c 2b y1 Intersection gives Cou rnot a c yl 2 y 2 2 Stackelberg Equilibrium is point on Best Response of Firm 2 that maximizes profits of Firm 1 Plot iso profit curve of Firm 1 l a C 741 by1y2 574 Solve for yg along iso profit a c 1 y2 b yl byl Iso profit curve is flat for dyg dyl 5041 or 91 Figure 3 General Equilibrium Introduction 0 So far we looked at consumers Demand for goods Choice of leisure and work Choice of risky activities 0 We also looked at producers Production in perfectly competitive firm Production in monopoly Production in oligopoly 0 We also combined consumers and producers Supply Demand Market equilibrium 0 Partial equilibrium one good at a time 0 General equilibrium Demand and supply for all goods supply of young workerT wage of experi enced workers minimum wageT effect on higher earners steel tariffT effect on car price 4 Edgeworth Box Pure Exchange 0 Nicholson Ch 13 pp 441 444 476 478 Ch 12 pp 335 338 369 370 9th 0 2 consumers in economy 73 12 0 2 goods 1 2 Endowment of consumer 73 good j w 1 2 1 2 0 Total endowment wl 0J2 wl wl 002 002 o No production here With production as in book wl 0J2 are optimally produced o Edgeworth box 0 Draw preferences of agent 1 0 Draw preferences of agent 2 0 Consumption of consumer 73 good j o Feasible consumption gmmwi o If preferences monotonic w for all 73 0 Can map consumption eves into box 5 Next lecture 0 General Equilibrium o Barter


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Amaris Trozzo George Washington University

"I made $350 in just two days after posting my first study guide."

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."

Parker Thompson 500 Startups

"It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.