Basic decision and preference theory -- Household theory and theory of the firm -- Games and industrial organization -- Bargaining theory and Pareto optimality -- Bayesian games and mechanism design -- Perfect competition and competition policy -- Contracts and principal-agent theories.

It is fashionable to criticize economic theory for focusing too much on rationality and ignoring the imperfect and emotional way in which real economic decisions are reached. All of us facing the global economic crisis wonder just how rational economic men and women can be. Behavioral economics...