Customer Reviews

Microeconomic Theory

5 star:		(39)
4 star:		(12)
3 star:		(16)
2 star:		(8)
1 star:		(9)

 

 

I have read three graduate level Microeconomic Thoery texts: Mas-Colell, et al. Microeconomic Theory, Varian's Microeconomic Analysis, and Krep's A Course in Microeconomic Theory.

Mas-Colell is generally the most detailed, inclusive book that must be on the shelf of any serious economist. It has its weak points; however, it is the best that there is for learning the basics of microeconomic theory. Note that this book is generally the text of choice for the first year of graduate study at most all of the top econ programs.

The math requirements for getting the most out of this book are fairly heavy. With out a good math for economists course, this book is very difficult to use.

Kreps book takes on more of the game theory approach. This is very interesting for the game/decision theorist, and is a highly recommended in addition to Mas-Colell for those with these interests.

Varian is often used in masters degree level graduate programs, and lower-level phd programs. At Cornell, Varian covered most of the information from the first semester of microeconomics, but provided virtually no help after that.

It is not as intense as Mas-Colell. However, it is often very helpful in its own right. For students who are using Mas-Colell in their courses, but are struggling to grasp all of the concepts, Varian presents the information in a more "user-friendly" way. He spends more time explaining the concepts using english rather than math, which can be very helpful to someone just starting out.

Additionally, I found the practice problems and examples in Varian very helpful when studying for exams.

In summary, all serious economists usually have Mas-Colell. Other than that, choose your additional books based on your needs and interests.

Things to know unless you are an econ student who's already done Varian and Kreps at the graduate level & are totally comfortable with that:
- you'll need to supplement this book with Varian and Kreps. Kreps provides good intuition but Varian helps you break in gently. Note that Varian alone will not do - doctoral coursework in micro is much too sophisticated. I literally went through all three books sequentially - Varian first, Kreps next & MWG last to get what was going on in MWG.
- Try to do coursework in differential equations, real analysis & linear algebra before you touch this book. At the very least you HAVE to understand differential calculus really well. The math in this book is incredbly hard otherwise (trust me, I was in misery for 2 semesters).
- This book is great for general equilibrium models etc., but the game theory stuff gets out of hand really quickly. Be sure to use Tirole (Industrial Organization) & Kreps to guide you through the game theory in this book.
To the graduate students in business that aren't majoring in econ: you won't use 80% of what this book teaches you, but if you internalize even 30% of it, you will benefit for a long while.

This is the typical first year graduate text book in economics. It is target for this audience and it will probably not be very useful to you if you are not in academia. Intermediate to advanced undergraduate could find the book useful provided that they meet the mathematical requirements (more on this below). As it is a first year grad book, it tries to cover all the topics in microeconomics rather than going in depth in any of them. If you go on studying micro, this book will not be enough for your field of concentration.

A last word for first year graduate student whose course adopt a different text book (Varian, Kreps...). It probably worth sticking to your own book rather than buying this one hoping to understand from MWG what you don't get from Varian or Kreps. I tried the reverse process and I miserably failed: notation and exposition are very different; bridging the gap between two books requires too much work.

Now to the mathematical question. Before even starting you should know at least derivatives and matrices. And again, if you are a grad student, you must know them. I think you can read most of the book knowing "only" the following theorems: kuhn-tucker, implicit function, separating hyperplane, fixed point, envelope theorem. This topics are briefly dealt with in the appendix. If you have time it might worth to master these theorems before reading the book, at least kuhn-tucker!

As three authors contributed to the book the clarity (and the depth) varies A LOT among chapters. I will now review the chapters that I studied in depth: ch. 1,2,3,4 preferences, choice and demand: clear and comprehensive 4 stars ch. 5 production: worst chapter in the book, unclear, no stars. ch. 6 uncertainty: very clear, but barely scratches the surface of the topic: 3 stars ch. 7, 8, 9 game theory: clear, medium depth: 4 stars ch. 13, 14 adverse selection, signalling, principal agency: best chapters in the book, very clear, and medium depth 5 stars.

This textbook is justly being adopted by almost all gruaduate programs in economics. It contains a very modern and quite exhaustive treatment of modern microeconomic theory, including of course demand and production, game theory, general equilibrium theory, contract theory. It also have an excellent mathematical appendix. It's a tought book to study, very advanced, but while in graduate school I found it well written, and very useful. And, believe me, I am not a fan of micro theory! Overall, the only problem I have with this book is... not really the book, but rather the fact that nowadays most graduate programs ONLY deal with the theory contained in this book, disregarding instead the many many usuful results and insights that you can find, say, in another masterful classic, Deaton and Muellbauer's "Economics and consumer behavior", which unlikely Mas-Colell et al. has a stong emphasis on tools that researchers working in applied labor/public/development economics will find invaluable. Indeed, I am waiting for someone to write a more updated and modern version of a book like Deaton & Muellbauer, but apparently it has not appeared yet. Anyway, Mas-Colell is an amazingly good textbook for micro theory, and it has justly become a classic.

I like the book, it's certainly rigorous and explains the concepts reasonably well, at an advanced level. I have little to add to the other reviewers' comments on that.

I'd like to add that this textbook is definitely the most carefully produced I own. Even though it's in its first ed. there are very few typos. More importantly, the layout is very convincing. Even complex graphs are are clearly and beautifully drawn, the typesetting is 100% consistent throughout the book.

OK, you might say what the heck? But I regrettably have to admit that I currently spend as much time with "MWG" as with my girlfriend. So, I learnt to appreciate that it looks as good as she does (in relative terms: for a book compared to other books as her compared to other women, that is). All of you who still remember Greene's 4th ed (the blue letters...) will agree with me that a well-produced book is something to which some attention should be paid!

Whether you use this or Varian...you will still need to have a competent instructor. The book is too big and murky for a graduate student to wade through on his own and much of the bulk of the book is unusable in a typical first-year micro course. Game theory is better dealt with via Tirole or a specialized treatment.

Certainly, you could spend an entire summer doing nothing but trying to work your way through the entire book. You could also read all of Judge, et al, or you could read all of Blanchard and Fisher...but you could have done 100 things more useful in becoming a good economist an a successful graduate student.

Now that I have finished the program, when I need a definition or an explanation, I almost always reach for Varian. MWC gathers dust.

When I started out with this book I hated it. Well, its still a pain, but the longer you study this book the more sense it makes, and the more you understand why they NEED to use all the notation. Modern micro gets very abstract, and we all need to learn all of that. Only when you go back over the text after your first year do you realize how well this book is written. There are some problems with the text, though: (i)too many interesting points are left as exercises, (ii)examples are not fleshout out enough, and (iii) they often try to "explain" a concept by using ONLY the math. Using both math and English would be better.

We are using this book for my Ph.D.-level microeconomics class, which happens to be taught by one of the authors of the book. I have been struggling with the text for two months now, and find it more and more frustrating at every turn. I think this book spends far too much time turning simple economic concepts into arcane mathematical formulae without nearly enough attention to drawing out the important economic issues behind the math. I've had econ classes before. I know there are issues out there, and that economics is not just math, but you would never know it from this book!

Firstly, take care to read the mathematical appendix. Just get used to the notation. Once you do, I think the math is not at all hard. If you are going to be a graduate economics student, you HAVE to be totally comfortable with the math used in here. And what they teach you in "math camps" or first-year "math methods" classes goes way beyond what is used here.

I think it's much more the notation that puts people off. Can anyone please point out where exactly the MATHEMATICS used in the book is arcane or inaccessible? Yes, some of the questions at the back are quite hard, but again a little perseverance and the purchase of the Segal/Hara/Tadelis review book and I think you can do well in your micro prelims.

It's much more the case that MWG's presentation is very formal as is their notation. Yet once you get past this, the mathematics employed is really just multi-variate calculus and a bit of matrix algebra.

Strength: chapters 13, 14,15,16,18,21,22,23. Really well laid out stuff. Section on adverse selection is really well-laid out. Problems at the back of chapters 13 and 14 are pretty interesting and actually can be solved through intuition alone.

Weakness: Too arcane and theoretical for consumer theory. By "too arcane" etc I really mean that most professors at most schools never seem to test you on proving (for instance) the rigorous results on quasi-concavity, strict concavity and the like. Rather they like small tricky problems with Slutsky matrices and Euler equations. Yet if you read MWG you will spend a lot of time (for example) poring through proofs of the continuity of the expenditure function and representation theorems for preferences. It is true that Profs lecture and set problems out of Varian on this stuff and then rather cruelly give you MWG as the "reference text."

Producer theory: this is really useless, except for some nice diagrams on cost and output. But again a good intermediate text has this too. Again most professors most places do not set the sort of problems you find at the back of MWG.

Intermediate: game theory. Relevant problems and good examples, but you can get too bogged down in writing out strategy sets and correspondences and the like.

But: overall my criticisms of this book are linked mainly to the discrepancy between actual teaching practises and the content of the book. As a self-contained book, MWG presents matters formally and maybe a bit tediously, but it does provide a feel for the elegance of modern, mathematical economic theory.

I learned this too late for my own good, but one other advice to users of this book: abandon the math when you solve the problems. There are lots of problems in here that primarily test your ability to set up problems and your intuition.

First off, don't let this be your first introduction to economics. For that, I strongly recommend Mankiw's Principles of Economics, which involves no math beyond basic algebra. This gigantic book, on the other hand, is used here at the University of Michigan for a full year of micro-theory (including game theory) for first-year PhD students, alongside a crash course in mathematics using Simon & Blume's excellent Mathematics for Economists. It's not trying to teach intuition; it's trying to teach concepts that you'll need to understand in order to grasp current work being published in the field's most prestigious journals.

The scope of the book is very impressive; it's no wonder that it's become the standard graduate-level text in so many universities. In the context of a course taught by a great professor, it's an excellent supplement. Unfortunately, I can't recommend it for self-study. Definitions are sometimes vague; examples fail to illuminate the turgid concepts being outlined; and there are no solutions to the numerous exercises. (A separate solution manual is available online, but it's often unenlightening.)

In short, this book is a boot camp for micro-theorists. It will not hold your hand.

But there is little in the way of serious competition. Kreps' A Course in Microeconomic Theory is often clearer, as is Rubinstein's Lecture Notes in Microeconomic Theory: The Economic Agent (also a free download at his website). Both were recommended by a professor as supplements. Neither of them can possibly hope to cover everything that Mas-Colell et al. cover. There is no perfect micro-theory book. For game theory (which this book spends a few middle chapters on), I'd strongly recommend Binmore's lively (though demanding) Playing for Real.