Advanced Microeconomics


Advanced Microeconomics

Marcus Asplund (MAS), Professor, CBS, Department of Economics
Anette Boom (AB), Associate Professor, CBS, Department of Economics
Karol Szwagrzak (KS), Associate Professor, CBS, Department of Economics
Alexander Christopher Sebald (ACS) , Head of Department, CBS, Department of Economics

Course coordinator
Anette Boom, Associate Professor, CBS, Department of Economics,


The course is compulsory for the PhD students of Copenhagen Business School’s Department of Economics, but also open to other PhD students with knowledge of intermediate microeconomics, some econometrics, as well as mathematical tools like multivariate calculus, constrained maximization, and linear algebra, and basic probability and statistics.


After the course, students shall be able to:

  • develop an understanding of economic theory as applied in cutting edge research across all fields of economics,
  • demonstrate knowledge of the concepts, models, methods and tools of advanced microeconomic theory as discussed during the course,
  • read and understand international research papers expanding the frontier of microeconomic research,
  • apply and adapt advanced microeconomic models to specific research questions,
  • and evaluate microeconomic models used by other scholars.

Course content

The aim of the course is to get the students acquainted with the most important models and methods used in advanced microeconomic theory in order to enable them to apply these models and methods later in their own research. This is done by introducing the students to either very influential and/or recent academic research.

The course covers the following topics:

  1. Decisions Theory (Uncertainty, Risk, and Time preferences)
  2. Game Theory,
  3. Mechanism Design and Contract Theory.

Teaching style
Lectures and student workshops.

Lecture plan
Week 40 - 04.10.2022 - 9-12am & 1-3pm

Introduction (KS and MAS)

Read before the lecture: Chapter 1 in Mas-Colell et al. (1995), Chapters 8, 10, 14 and 17  in Gilboa (2009).

The lecture starts illustrating the interaction between theoretical microeconomic models and empirical research on real-life economic problems. For this purpose, MAS will present  current research on an empirical test of bargaining theory.

The lecture then provides an overview of course and guidance on how to approach the readings in rest of the programme.

Week 41 - 10.10.2022 - 10-12am & 2.30-4.30pm

Revealed Preferences, Risk and Uncertainty (KS)

Chapters 8, 10, 14 and 17 in Gilboa (2009),
Chapters 2 and 3 from Chambers and Echenique (2016).

Week 41 - 11.10.2022 - 10-12am & 1-3pm

Risk and Uncertainty (KS)

Gilboa and Schmeidler (1989), Tversky and Kahneman (1992),  Klibanoff et al. (2005), Bordalo, Gennaioli and Schleifer (2012)

Week 46 - 16.11.2022 - 10-12am & 1-3pm

Time Preferences, Peferences for Flexibility, Temptation and Self-control  (KS)

Bleichrodt et al. (2008), Fishburn and Rubinstein (1982), Gul and Pesendorfer (2001

Week 46 - 18.11.2022- 10-12am & 1-3pm

Stochastic Choice (KS)

 Chapter 7 in Chambers and Echenique (2016), Gul and Pesendorfer (2006)

Week 47 - 25.11.2021 - 10-12am & 1-3pm

Experiments on Belief Dependent Preferences, Guilt and Salience (ACS)

Bellemare, Sebald and Suetens (2018), Bellemare, Sebald and Suetens (2019), Nielsen, Sebald and Sørensen (2021)

Week 48 - 30.11.2022 - 10-12am & 1-4pm

Game Theory (KS)

Osborne and Rubinstein (1994), Chapter 1,2,6 & 11 and 12

The lecture gives you an overview over important game theoretic concepts which are used in the literature on which the rest of the course is based.

Week 48 - 02.12.2022 - 10-12am & 1-3pm

Mechanism Design (KS)

Jackson (2014)

Week 49 - 06.12.2022 - 10-12am

Student Workshops: Moral Hazard, Adverse Selection and Signalling (AB)

Students are divided into three groups and each presents one of the three topics. They can take inspiration from Bolton and Dewatripont (2005)

Week 49 - 07.12.2022 - 10-12am & 1-3pm

Auction Theory (AB)

Myerson (1981), Chapter 1, and 2 in Krishna (2010)

Week 50 - 13.12.2022 - 10-12am & 1-3pm

The Theory of the Firm (AB)

Grosman and Hart (1986)

How to Write a Referee Report? (AB)

Berk, Harvey and Hirshleifer (2017)

Learning objectives
Please see aim.


Attendance is obligatory. In order to pass the course, students have to master three different tasks in a satisfactory manner with the possibility of retaking each of them once.

  1. The students have to either hand in the solutions to one problem-set or to hand in a research proposal (approximately 10 pages) on the basis of the microeconomic theory taught in the class. The hand out date for the problem set is January 4, 2023 and hand in date for either the research proposal or the solutions of the problem set is January 18, 2023.
  2. They have to present one academic research article mentioned in the lecture plan below and comment on the presentation of another student in class.
  3. They have to write a referee report (approximately 4 pages) on an unpublished microeconomic theory paper of their own choice and hand it in until December 31, 2022.


Start date

End date




Course Literature

Selected Chapters from:

Bolton, Patrick and Mathias Dewatripont (2005), Contract Theory, MIT Press: Cambridge, MA.

Chambers, Christopher P. and Federico Echenique (2016), Revealed Preference Theory, Econometric Society Monograph, Cambridge University Press: Cambridge, UK.

Gilboa, Itzhak (2009), Theory of Decision under Uncertainty, Econometric Society Monographs 45, Cambridge: Cambridge University Press.

Jackson, Matthew O., Mechanism Theory (December 26, 2014). Available at SSRN: or

Krishna, Vijay (2010), Auction Theory, Second Edition, Academic Press: Amsterdam et al.

Mas-Colell, Andreu, Michael D. Whinston and Jerry R. Green (1995), Microeconomic Theory, Oxford University Press: New York and Oxford.

Osborne, Martin and Ariel Rubinstein (1994), A Course in Game Theory, MIT Press: Cambridge, MA.

Selected Journal Articles

1 Decision theory: decision making under risk, uncertainty, and over time
Introduction:  Chapter 1 in Mas-Colell et al. (1995); Chapters 8, 10, 14, 17 in Gilboa (2009)

Revealed preferences: Chambers and Echenique (2016), Rubinstein and Salant (2006), Manzini and Mariotti (2007), Masatlioglu et al. (2012), Chambers et al. (2017), De Clippel and Rozen (2021)

Risk and uncertainty: Tversky and Kahneman (1992) Klibanoff et al. (2005), Gilboa and Schmeidler (1995), Easley and Rustichini (1999), Dekel et al. (2001), Marinacci (2002), Halevy and Feltkamp (2005), Halevy (2007), Ahn (2008), Strza- lecki (2011), Bordalo et al. (2013) Nielsen et al. (2021) Bellemare et al. (2018) Belle- mare et al. (2019)

Time preferences, flexibility, temptation, and self-control: Kreps (1979), Gul and Pesendorfer (2001), Sarver (2008) Bleichrodt et al. (2008), Fishburn and Rubinstein (1982)

Stochastic choice: Chambers and Echenique (2016), Gul and Pesendorfer (2006), Ahn and Sarver (2013), Gul et al. (2014), Manzini and Mariotti (2014), Brady and Rehbeck (2029) Lu (2016), Kitamura and Stoye (2018) Cerreia-Vioglio et al. (2019)

2 Game theory and strategic decision making

Game theory: Chapters 1, 2, 6, 11, 12 in Osborne and Rubinstein (1994), Osborne and Rubinstein (2003), Esponda and Pouzo (2016), Salant and Cherry (2020)

Mechanism design: Jackson (2014), Border and Sobel (1987), Abdulkadiro˘glu and Sönmez (2003), Ben-Porath et al. (2014)

Student workshops on moral hazard, adverse selection and signalling:
Bolton and Dewatripont (2005)

Auction theory: Krishna (2010), Myerson (1981), Pesendorfer and Swinkels (2000), Bulow and Klemperer (2002) Goeree and Offerman (2003), Burkett and Woodward (2020)

The theory of the firm: Grossman and Hart (1986), Levin (2003), Gans (2005), Hart and Moore (2008)

How to write a referee report? Berk et al. (2017)

- Abdulkadiro˘glu, A. and T. S¨onmez (2003). School choice: A mechanism design approach. American Economic Review 93 (3), 729–747.
- Adams, A. and J. Abaluck (2018, May). What do consumers consider before they choose? Identification from asymmetric demand response. link.
- Ahn, D. S. (2008). Ambiguity without a state space. The Review of Economic Studies 75 (1), 3–28.
- Ahn, D. S. and T. Sarver (2013).  Preference for flexibility and random choice.
Econometrica 81 (1), 341–361.
- Bellemare, C., A. Sebald, and S. Suetens (2018). Heterogeneous guilt sensitivities and incentive effects. Experimental Economics 21 (2), 316–336.
- Bellemare, C., A. Sebald, and S. Suetens (2019). Guilt aversion in economics and psychology. Journal of Economic Psychology 73, 52–59.
- Ben-Porath, E., E. Dekel, and B. L. Lipman (2014). Optimal allocation with costly verification. American Economic Review 104 (12), 3779–3813.
- Berk, J. B., C. R. Harvey, and D. Hirshleifer (2017). How to write an effective referee report and improve the scientific review process. Journal of Economic Perspectives 31 (1), 231–244.
- Bleichrodt, H., K. I. Rohde, and P. P. Wakker (2008). Koopmans’ constant dis- counting for intertemporal choice: A simplification and a generalization. Journal of Mathematical Psychology 52 (6), 341–347.
- Bolton, P. and M. Dewatripont (2005). Contract Theory. MIT Press.
- Bordalo, P., N. Gennaioli, and A. Shleifer (2013). Salience and consumer choice.
Journal of Political Economy 121 (5), 803–843.
- Border, K. C. and J. Sobel (1987). Samurai accountant: A theory of auditing and plunder. The Review of economic studies 54 (4), 525–540.
- Brady, R. and J. Rehbeck (2029). Menu-dependent stochastic feasibility. Economet- rica 83 (3), 1203–1223.
- Bulow, J. and P. Klemperer (2002). Prices and the winner’s curse. The Rand Journal of Economics 33 (1), 1–21.
- Burkett, J. and K. Woodward (2020). Uniform price auctions with a last accepted bid pricing rule. Journal of Economic Theory 185 (1). Article 104954.
- Cerreia-Vioglio, S., D. Dillenberger, P. Ortoleva, and G. Riella (2019). Deliberately stochastic. American Economic Review 109 (7), 2425–45.
- Chambers, C. and F. Echenique (2016). Revealed Preference Theory. Econometric Society Monographs. Cambridge University Press.
- Chambers, C. P., F. Echenique, and E. Shmaya (2017). General revealed preference theory. Theoretical Economics 12 (2), 493–511.
- De Clippel, G. and K. Rozen (2021).  Bounded rationality and limited data sets. Theoretical Economics 16, 3–17.
- Dekel, E., B. L. Lipman, and A. Rustichini (2001). Representing preferences with a unique subjective state space. Econometrica 69 (4), 891–934.
- Easley, D. and A. Rustichini (1999). Choice without beliefs. Econometrica 67 (5), 1157–1184.
- Einav, L. and A. Finkelstein (2018). Moral hazard in health insurance: What we know and how we know it. Journal of the European Economic Association 16 (4), 957–982.
- Einav, L., A. Finkelstein, S. P. Ryan, P. Schrimpf, and M. R. Cullen (2013). Selection on moral hazard in health insurance. The American Economic Review 103 (1), 178–219.
- Esponda, I. and D. Pouzo (2016). Berk–nash equilibrium: A framework for modeling agents with misspecified models. Econometrica 84 (3), 1093–1130.
- Fishburn, P. C. and A. Rubinstein (1982). Time preference. International Economic Review , 677–694.
- Gans, J. S. (2005). Markets for ownership. The Rand Journal of Economics 2005 (2), 433–445.
- Gilboa, I. (2009). Theory of decision under uncertainty, Volume 45. Cambridge University Press.
- Gilboa, I. and D. Schmeidler (1995). Case-based decision theory. The Quarterly Journal of Economics 110 (3), 605–639.
- Goeree, J. K. and T. Offerman (2003). Competitive bidding in auctions with private and common values. The Economic Journal 113 (489), 598–613.
- Grossman, S. J. and O. D. Hart (1986). The costs and benefits of ownership: A theory of vertical and lateral integration. Journal of Political Economy 94 (4), 691–719.
- Gul, F., P. Natenzon, and W. Pesendorfer (2014). Random choice as behavioral optimization. Econometrica 82 (5), 1873–1912.
- Gul, F. and W. Pesendorfer (2001).  Temptation and self-control.  Economet- rica 69 (6), 1403–1435.
- Gul, F. and W. Pesendorfer (2006). Random expected utility. Econometrica 74 (1), 121–146.
- Halevy, Y. (2007). Ellsberg revisited: An experimental study. Econometrica 75 (2), 503–536.
- Halevy, Y. and V. Feltkamp (2005). A bayesian approach to uncertainty aversion.
The Review of Economic Studies 72 (2), 449–466.
- Handel, B. and J. Schwartzstein (2018). Frictions or mental gaps: What’s behind the information we don’t use and when do we care? Journal of Economic Per- spectives 32 (1), 155–78.
- Handel, B. R. (2013). Adverse selection and inertia in health insurance markets: When nudging hurts. The American Economic Review 103 (7), 2643–82.
- Hart, O. and J. Moore (2008). Contracts as reference points. The Quarterly Journal of Economics 73 (1), 1–48.
- Jackson, M. O. (2014). Mechanism theory. Available at SSRN 2542983 .
- Keane, M. P. (2010). A structural perspective on the experimentalist school. Journal of Economic Perspectives 24 (2), 47–58.
- Kitamura, Y. and J. Stoye (2018). Nonparametric analysis of random utility models.
Econometrica 86 (6), 1883–1909.
- Klibanoff, P., M. Marinacci, and S. Mukerji (2005). A smooth model of decision making under ambiguity. Econometrica 73 (6), 1849–1892.
- Kreps, D. M. (1979). A representation theorem for” preference for flexibility”. Econo- metrica, 565–577.
- Krishna, V. (2010). Auction Theory (2nd ed.). Amsterdam et al.: Academic Press.
 - Levin, J. (2003). Relational incentive contracts. The American Economic Review 93 (3), 835–857.
- Lu, J. (2016). Random choice and private information. Econometrica 84 (6), 1983–2027.
- Manzini, P. and M. Mariotti (2007). Sequentially rationalizable choice. American Economic Review 97 (5), 1824–1839.
- Manzini, P. and M. Mariotti (2014). Stochastic choice and consideration sets. Econo- metrica 82 (3), 1153–1176.
- Marinacci, M. (2002). Probabilistic sophistication and multiple priors. Economet- rica 70 (2), 755–764.
- Mas-Colell, A., M. Whinston, and J. Green (1995). Microeconomic Theory. Oxford University Press.
- Masatlioglu, Y., D. Nakajima, and E. Y. Ozbay (2012). Revealed attention. American Economic Review 102 (5), 2183–2205.
- Myerson, R. B. (1981). Optimal auction design. Mathematics of Operations Re- search 6 (1), 59–73.
- Nielsen, C. S., A. C. Sebald, and P. N. Sørensen (2021, March). Testing for salience effects in choices under risk. University of Copenhagen.
- Osborne, M. J. and A. Rubinstein (1994). A course in game theory. MIT Press.
- Osborne, M. J. and A. Rubinstein (2003). Sampling equilibrium, with an application to strategic voting. Games and Economic Behavior 45 (2), 434–441.
- Pesendorfer, W. and J. M. Swinkels (2000). Efficiency and information aggregation in auctions. The American Review of Economic Studies 90 (3), 499–525.
- Rubinstein, A. and Y. Salant (2006). A model of choice from lists. Theoretical Economics 1, 3–17.
- Salant, Y. and J. Cherry (2020). Statistical inference in games. Econometrica 88 (4), 1725–1752.
- Sarver, T. (2008). Anticipating regret: Why fewer options may be better. Econo- metrica 76 (2), 263–305.
- Strzalecki, T. (2011). Axiomatic foundations of multiplier preferences. Econometrica 79 (1), 47–73.
- Tversky, A. and D. Kahneman (1992). Advances in prospect theory: Cumulative representation of uncertainty. Journal of Risk and Uncertainty 5 (4), 297–323.

DKK 9100,- / Euro 1225,-

Minimum number of participants

Maximum number of participants

Copenhagen Business School
Porcelænshaven 16A
2000 Frederiksberg
Room: PH16A 2.80 

Contact information
For administration of the course:
PhD Support 
Nina Iversen
+45 3815 2475

Registration deadline

The Course starts on October 4 in week 40 with an introduction and two sessions (October 10 and 11) in week 41 and then continues from week 46 until week 50 (see the details in the attached lecturing plan).
Please note that your registration is binding after the registration deadline. 
Register here