Applied Microeconomics 2400-DS1AMI

The aim of this course is to present a new approach to microeconomics analysis, which is based on experimental and computational methods. By combining these methods, one can test economic theory and analyse real-life economic problems more efficiently. It is a first step towards the full introduction of complexity in microeconomic analysis. During the course, the selected microeconomic issues will be presented. Each class is divided into two parts: during the first part, the students participate in experiments, or conduct a simulation; during the second part, the economic theory will be questioned/examined based on previously obtained results. The lecturer will introduce practical implications as well as theoretical and practical IT tools that allow for repeating experiments, simulations and analysis.
In education, science curiosity should be an important motivating factor for gaining knowledge and self-development. However, this type of curiosity erodes with age and it is increasingly difficult to awake it among students. Chalk and talk approach could completely discourage students from further exploration of theoretical models, and this is particularly true for microeconomics. On the other hand, microeconomics has incredible potential to create science curiosity, as its models directly relate to the observed economic behaviour of people. We need, however, the stimulus that will trigger the curiosity. Such an incentive could be a natural desire to know thyself. On the lecture, the ad hock research will be used to create the science curiosity on the basis of self-curiosity. Prior to lectures, the students participate in the online research, being passive subjects of the research. Before this survey/experiment, they should not have any knowledge on the issue. Shortly after the survey, they are informed that the results of the study will be used to analyze microeconomic models, and they are encouraged to try to answer the questions whether their decisions or answers were consistent with economic theory, optimal or efficient, and how those decisions could affect the welfare of the others. In this way, the teacher creates an information gap among students, a sense of deprivation - the unsatisfied need for knowledge on the decisions taken. There appears the "science curiosity that can be addressed during the lectures and/or explored by students themselves.

Topic 1 Course Overview;
- Introduction to experimental and computational microeconomics
- Introduction to R-CRAN, MAXIMA, NetLogo programs

Topic 2 General view of microeconomics; Marshall vs. Chamberlain-Robinson vs. Arrow–Debreu
- Standard economic model (SEM) and general equilibrium models

Topic 3 Selected issues from the theory of consumer choice
- Rationality and the standard economic model (SEM)
- Vernon Smith's behaviorist critique vs. ecological rationality
- Intertemporal choice and financial and behavioral approaches
- Uncertainty and risk; risk perception and risk aversion
- Ergodicity of economic processes

Topic 4 Social interaction - market
- Perfect competition and Vernon Smith's market experiments
- Monopoly - tools for appropriating consumer surplus, price discrimination, auctions, bundling,...
- Information Theory; Attention Economics