Most helpful critical review
25 of 32 people found the following review helpful
Apart from the Rest...
on March 6, 2003
A Course in Microeconomic Theory is one of the best mainstream price theory texts available. There are mistakes in this book. Kreps takes Walrasian equilibrium a bit too seriously. He admits to the unreal nature of important parts of Walrasian equilibrium. He admits that it does not tell us how markets work, and that it omits important institutions, like money. Kreps refers to the Walrasian Auctioneer as fairly unrealistic (p 195), when the adjective utterly might be more fitting.
He also takes 'benevolent social Dictators' too seriously. The next edition of this book would be much superior if the author were to pay more attention to Public Choice theory.
However, he does explain economic concepts fairly well. This is not just an exercise in mathematical games. Much of the math that he uses is game theoretic. Kreps included an entire section on game theory. He uses more math than one really needs to understand economics, but the math that he does use is the most useful there is.
There is an entire section on information economics. It goes farther than most other price theory texts in discussing this important topic, though not far enough.
This books biggest strength is its' section on transaction costs theories of the firm. Here the author remedies much of the unreal character of price theory. This alone sets it apart from other mainstream texts.
This book is the best at teaching mainstream economics. Kreps is modest in his claims about the realism regarding standard models of competitive equilibrium, and explains concepts and techniques well. He also focuses on the many of the right concepts and techniques. The main defect in this book is that it does not go far enough in adding realism to price theory.