Ateneo - UPO

The course addresses the analysis of strategic decisions by firms and consumers in non-perfectly-competitive markets, combining the tools of industrial organization with those of non-cooperative game theory.

Consumer Theory and Theory of the Firm Module1) L. Pepall, D. Richards, G. Norman e G. Calzolari; Organizzazione industriale; McGraw-Hill; quarta edizione.2) The Core L'economia Il Mulino 2018 disponibile in open access al link https://www.core-econ.org/the-economy/it/.Game Theory Module1) Robert Gibbons, Teoria dei Giochi, Il Mulino 2) C. D. Aliprantis e S. K. Chakrabarti, Games and Decision Making, Oxford university press, 2010. 3) A. Mas- Colell, M.D. Whinston, J. Green, Microeconomic Theory (For a deeper learning of the topic)

The integrated course (consisting of the two modules Consumer Theory and Theory of the Firm and Game Theory) carries 8 ECTS, corresponding to 60 hours of classroom teaching. Within each module (4 CFU), approximately 20 hours will be lecture-based teaching (DE) and 10 hours interactive teaching (DI), with the proportions not fixed within each lesson.
The aim of the course is to provide students with a general understanding of modern industrial organization based on the strategic interaction between firms and consumers. By the end of the course, students will understand how markets function by analyzing the behavior of competitive and non-competitive firms, including through the tools of modern game theory.

Elements of microeconomics (Pareto efficiency, equilibrium price and quantity under monopoly and perfect competition, consumer and producer surplus), real functions of one and several real variables, optimization, basic notions of probability theory.

Lectures in both modules, aimed at presenting the topics on the syllabus and discussing them, with an alternation of lecture-based (DE) and interactive (DI) teaching in order to promote student engagement and active participation, including, where possible, through the use of the flipped classroom approach.

Students with disabilities, Specific Learning Disorders (DSA) or Special Educational Needs (BES) can request dedicated services and tools from the University's Staff for Career Development and Student Services, consulting the dedicated University webpage. After contacting the University Staff, they can contact the instructor in charge of the module regarding the specific examination arrangements.

Learning outcomes are assessed through a compulsory written test and an optional oral exam, for each module. The written test lasts 60 minutes and allows a maximum mark of 26/30.
Consumer Theory and Theory of the Firm module: the test consists of one applied exercise (max 8 points) and two theoretical questions (max 9 points each), designed to assess knowledge and understanding of the main theoretical models of industrial organization and the ability to apply them to economic analysis, interpreting their results. To pass, students must know the fundamental concepts, be able to apply the models to standard problems, and use appropriate economic terminology.
Criteria: Sufficient (18–20): knowledge of fundamental concepts and essential understanding of the models; correctly answers the fundamental elements of at least two of the three questions, with partial application ability or not fully consolidated theoretical knowledge. Good (21–24): good knowledge and understanding, reliable application ability; answers substantially correct, complete and well argued. Excellent (25–26): thorough knowledge, full application ability; answers correct, complete, rigorous, with appropriate economic interpretation and critical connections between concepts.
Game Theory module: the test consists of one theoretical question (max 8 points) and two applied exercises (max 9 points each), designed to assess knowledge of the constituent elements of a game and the properties of equilibria, and the ability to solve games in normal and extensive form. To pass, students must know the fundamental elements of game theory, be able to solve standard problems, and correctly use the discipline's terminology.
Criteria: Sufficient (18–20): knowledge of fundamental concepts and essential understanding of the properties of equilibria; fully solves at least one of the two exercises and sets up the other, with sufficient knowledge of the theoretical question. Good (21–24): good knowledge and understanding, fair application ability; correctly solves both exercises, applying best reply and/or mixed strategies where required, with a fair level of theoretical understanding. Excellent (25–26): thorough knowledge, full application ability including variants; answers correct, complete, rigorous, with complete theoretical justifications.

Oral exam (optional, both modules): may only be taken with a passing mark in the written test; consists of the discussion of a short scientific paper or a topic not covered in class, chosen by the student from a list published on the course webpage. It assesses independent learning ability, communication skills, and the ability to connect the various topics. It must be taken in the same exam session as the written test and can raise the mark by up to a maximum of 7 points, up to an overall maximum of 30 cum laude.

The final mark for the integrated course is agreed collegially by the instructors responsible for the two modules, based on the written test results and on what is observed in any oral exams, also considering the student's ability to connect the two disciplinary areas; it is not necessarily the arithmetic mean of the two marks.

Due to the integrated nature of the course, the exams for both modules must be taken and passed in the same session, otherwise the mark loses validity.

Registration for the written test via the student portal is mandatory: once the maximum number of exam attempts allowed under the Teaching Regulations has been reached, the system will not permit further registrations.

● Module 1 – Consumer Theory and Theory of the Firm: consumer utility and firm profit maximization; market structure and power; price discrimination; product differentiation; static oligopoly models (Cournot, Bertrand); dynamic games (Stackelberg).
● Module 2 – Game Theory: elements of non-cooperative game theory; normal- and extensive-form games; Nash equilibrium, mixed strategies; backward induction and subgame-perfect equilibrium; repeated games and the Folk Theorem; Bayesian games.

The two modules run in parallel over the semester with a teaching calendar synchronised between the two instructors: the game-theoretic concepts needed for the analysis of oligopoly models (Nash equilibrium, backward induction), developed in the Game Theory module, are scheduled to precede the point at which the Consumer Theory and Theory of the Firm module uses them for the analysis of the Cournot, Bertrand, and Stackelberg models.

- Knowledge and understanding: market structures, market power, fundamental concepts of non-cooperative game theory.
-Applying knowledge and understanding: representing situations of strategic interaction between firms and consumers in game form and solving them using the tools of game theory (Nash equilibrium, backward induction, mixed strategies).
-Making judgements: critically evaluating competitive and non-competitive scenarios and their implications in terms of welfare.
-Communication skills: presenting the logical steps of an argument clearly and rigorously, connecting the various topics covered and supporting one's own conclusions.
-Learning skills: at a sufficient/average level, independently using texts and materials to understand and solve standard problems; at an advanced level, also the ability to independently explore topics not explicitly covered in class.