Mathematical Economics II

Vrije Universiteit Amsterdam

Course Description

  • Course Name

    Mathematical Economics II

  • Host University

    Vrije Universiteit Amsterdam

  • Location

    Amsterdam, The Netherlands

  • Area of Study

    Economics, Mathematics

  • Language Level

    Taught In English

  • Prerequisites

    Mathematical Economics I, Linear Algebra, Analysis I, Probability Theory

    Hours & Credits

  • ECTS Credits

  • Recommended U.S. Semester Credits
  • Recommended U.S. Quarter Units
  • Overview

    The past two decades have seen a growing public and scientific fascination about the complex “connectedness” of modern society and
    markets. At the heart of this fascination is the idea of a network: the architecture of interconnections. This aspect permeates our social and
    economic lives in countless ways. Social networks play a central role in the transmission of information, how we vote, how diseases spread, whether we become criminals, what products we buy, which education we choose, and it highly impacts the likelihood of succeeding professionally. Furthermore, agents build their business relationships and networks anticipating the outcomes that result from this interaction. Network aspects also explain why many economic environments of interest are dominated by a few agents, be individuals or firms. Think for example of scientists competing for publicizing their work, pharma firms engaging in R&D for the development of new drugs, or online travel agents trying to attract hotels and travelers to their websites. The choices of these interconnected agents have far-reaching effects not only on prices, quantities, and the direction of innovation, and may cause wide repercussions throughout the economy.

    The course begins with an empirical background on social and economic networks, and an overview of the concepts used to describe and measure networks. Next, we cover a set of models about how networks form, including random network models, as well as strategic formation models, and some hybrid models. We then move to a discussion of a series of models of how networks impact behavior, including opinion formation, disease, contagion, diffusion, learning, and peer influences.

    Next, keeping an eye on the current pressing problems in business and society, the course centers around strategic behavior in markets and networks, both from the business perspective as well as from the societal viewpoint. We will discuss competition in the presence of
    network externalities, market power and abuse of dominant position, the formation of R&D collaboration alliances, the impact of cross-ownership on the intensity and the direction of innovation, information frictions in consumer and labor markets, consumer search, advertising models and search engine sponsored ad auctions.

    This course fits in the VU profile themes ‘Governance for Society’, ‘Connected World’, and ‘Science for Sustainability’.

    Part 1: Social and Economic Networks (Ines Lindner)

    1. Representing and measuring networks
    Applications: the architecture of social and economic networks, informal norm enforcement, social capital, Google page rank, citation network

    2. Random Growing Networks
    Applications: world wide web, small world phenomenon, romantic and sexual networks, collaboration networks

    3. Strategic network formation
    Applications: social media, collaboration networks, co-author networks

    4. Diffusion on Networks
    Applications: epidemics, health policies, diffusion of innovation, regulation of financial networks

    5. Learning on Networks
    Applications: opinion dynamics, belief formation, fake news, wisdom of crowd

    6. Games on Networks
    Applications: public goods, R&D networks

    Part 2: Networks and Markets (José Luis Moraga Gonzalez)

    1. Selling network goods
    Applications: hardware and software markets, videogames, apps

    2. Competition in markets for network goods
    Applications: telephone networks, standards wars, public policy in network markets

    3. Consumer search and advertising
    Applications: price comparison sites (, online travel agents (, expedia)

    4. Search engines on the internet Intermediaries
    Applications: price comparison sites (, online travel agents (, expedia)

    5. Business relations and the intensity and direction of innovation
    Applications: investment funds, mergers

    6. Auctions
    Applications: eBay auctions, Google sponsored ads

    Classes. During the class meetings, time will be made for discussing exercises.

    This course uses a blended learning approach. That means that students are asked to prepare the classroom meetings by reading articles and/or watching clips. Students can earn a bonus point by successfully answering quiz questions in class.

    Intermediate exam – Individual assessment
    Final exam – Individual assessment
    Individual assignment - Individual assessment
    Quizzes in classroom - Individual assessment

Course Disclaimer

Courses and course hours of instruction are subject to change.

Some courses may require additional fees.


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