One side of a market holds private information the other cannot observe or verify, giving the informed party a strategic advantage. Topic 1

Privately informed agents self-select in ways that harm the uninformed side; high types withdraw and the pool unravels toward a lemons-only equilibrium. Topic 1

A party takes on more risk because it does not bear the full consequences; arises post-contractually, unlike adverse selection. Topic 1

An informed party takes a costly action to credibly reveal high quality; works only when the signal is cheaper for high types (separating equilibrium). Topic 1

The uninformed party offers a menu of contracts each type self-selects into — the demand-side mirror of Signaling. Topic 1

The competitive equilibrium is not Pareto efficient; under Asymmetric Information the market can collapse to a lemons-only outcome despite gains from trade. Topic 1

A price is consistent with the inferences agents draw from it — the implied pool composition exactly justifies that price. Topic 1

A rivalrous but non-excludable good; absent coordination each user ignores the externality they impose, causing over-extraction (tragedy of the commons). Topic 1

A preference for a certain outcome over a fair gamble with the same expected value (concave utility); the reason a consumer will pay a premium above expected loss to be insured. Topic 1

An insurance premium equal to the insurer's expected pay-out, so the insurer breaks even; under Moral Hazard it is computed on the insured (over-consumed) quantities, so it exceeds the consumer's expected uninsured spending. Topic 1

The characteristics of a market — number of sellers, product differentiation, entry conditions — that determine how price, quantity, and surplus are split. Topic 2

Many buyers and sellers, a homogeneous product, and free entry; every participant is a price taker and the market clears at $P = MC$. Topic 2

A firm so small relative to the market that it treats price as given; its own output choice does not move the market price, so it maximises profit by setting $P = MC$. Topic 2

With Free Entry and exit, economic profit is competed to zero: price settles at minimum average cost and each firm produces at its efficient scale. Demand then fixes only the number of firms, not the price (constant-cost industry). Topic 2

The absence of entry/exit barriers; firms enter while profit is positive and exit while it is negative, which is what drives the Zero-Profit Condition in the Long-Run Equilibrium. Topic 2

The long-run condition $P = AC$: entry/exit eliminates economic profit, so price equals (minimum) average cost. Also underlies no-arbitrage across activities (e.g. the Airbnb/rental indifference). Topic 2

The output that minimises average cost (where $MC = AC$); in the long run every competitive firm produces here and the market price equals that minimum $AC$. Topic 2

A firm operates in the short run only if price covers average variable cost, $P \ge \min AVC$; otherwise it shuts down. Fixed costs are sunk, so losses are tolerated as long as variable costs are covered. Topic 2

A single seller facing whole-market demand; optimum at $MR = MC$ gives price above MC, output below the competitive level, and deadweight loss. Topic 2

A few firms, each aware its choices move the market; equilibrium is the Nash Equilibrium of the resulting strategic game. Topic 2

Bertrand Competition with differentiated products: each firm has market power on its own demand curve, taking rivals' prices as given. Topic 2

Imperfect substitutes — each firm faces a downward-sloping residual demand even with rivals present. Topic 2

$TC(Q)$ splits into explicit/implicit and fixed/variable costs; the two textbook shapes are constant MC ($TC=F+cQ$) and increasing MC (convex $TC$). Topic 2

The value of the best foregone alternative; counted as an implicit cost, so economic profit is below accounting profit. Topic 2

A cost already incurred and unrecoverable; rational forward-looking decisions ignore it (avoiding the sunk-cost fallacy). Topic 2

The price elasticity of demand — the responsiveness of quantity to price. Topic 2

The area between the demand curve and the price paid — the aggregate "deal" consumers get above what they pay. Topic 2

Charging different prices for similar goods (not reflecting MC differences) to capture more Consumer Surplus; comes in three degrees. Topic 2

Perfect PD: extract the entire Consumer Surplus via a Two-Part Tariff with $p=MC$ and fixed fee $T=CS$. Topic 2

Offer a menu of contracts so consumers self-select by unobserved type; must satisfy Incentive Compatibility. Also called Screening. Topic 2

Segment-based pricing on an observable group, with $MR_i = MC$ in each segment. Topic 2

A fixed entry fee $T$ plus a per-unit price $p$; the optimum sets $p=MC$ and $T=CS$, the constructive route to perfect PD. Topic 2

Selling goods together at a single price; extracts surplus when consumers' reservation values are negatively correlated. Topic 2

Demand of the multiplicative form $Q = kP^{-|E|}$ with elasticity constant at every point. Topic 2

In a Screening menu, each type weakly prefers its own contract over any other in the menu. Topic 2

The surplus a high type keeps because the firm cannot distinguish types and must deter mimicking the low-type contract. Topic 2

A markup measure of monopoly power, $L=(P-MC)/P = 1/|E|$. Topic 2

A tax on each unit; adds to marginal cost ($MC+t$), raising price (partial pass-through) and lowering quantity. Topic 2

A fixed tax paid whenever $q>0$; does not enter MC, so optimal price and quantity are unchanged. Topic 2

Who economically bears a tax (vs who legally pays). Under linear demand a per-unit tax splits 50/50; the less elastic side bears more. Topic 2

The formal study of strategic interaction — each player's payoff depends on everyone's actions. Topic 3

Situations where each player's payoff depends on others' actions, requiring beliefs about what rivals (also rational) will do. Topic 3

The payoff-matrix representation of a simultaneous-move game; rows are P1's strategies, columns P2's, cells the payoff pairs. Topic 3

The optimal strategy given a specific strategy of the opponent; at a Nash Equilibrium everyone is playing a best response. Topic 3

A strategy strictly dominated by another (worse for every opponent action) is never played by a rational player; weak domination relaxes "strictly". Topic 3

A strategy $s_i$ strictly dominated by $s_i'$ when $s_i'$ yields a strictly higher payoff for every opponent strategy. Topic 3

A strategy that is a Best Response to every possible opponent action; if all players have one, their joint play is a (dominant-strategy) equilibrium. Most games have none. Topic 3

A game of pure conflict where one player's gain is exactly the other's loss (e.g. matching-pennies / odd-or-even); typically has no pure-strategy Nash Equilibrium but a unique Mixed Strategy one. Topic 3

IESDS: successively remove strictly dominated strategies; never eliminates a Nash Equilibrium, order-independent. Topic 3

A strategy profile where no player can improve by unilaterally deviating, given everyone else's strategies. Topic 3

A probability distribution over pure strategies; in equilibrium each player is indifferent among the pure strategies played with positive probability. Topic 3

Each player has a dominant strategy whose joint play is Pareto-inferior to cooperating — the logic behind cartel collapse. Topic 3

Players prefer to coordinate on the same outcome but may disagree which (Battle of the Sexes; risk- vs Pareto-dominant equilibria). Topic 3

Both paid the lower of two named numbers; Iterated Dominance unravels every value to the floor despite mutual gains from a high value. Topic 3

Simultaneous price-setting with homogeneous goods; symmetric costs give $P=MC$ (Bertrand paradox), asymmetric costs give Limit Pricing. Topic 4

Setting price at/just below a rival's MC to deter entry or force out a higher-cost firm. Topic 4

Simultaneous quantity-setting; equilibrium is the Nash Equilibrium where firms' reaction functions cross. Topic 4

Sequential quantity choice; the leader substitutes the follower's reaction function into its own profit for a first-mover advantage. Topic 4

Firms coordinate output to maximise joint profit (act as a monopolist); jointly optimal but unstable, like a Prisoner's Dilemma. Topic 4

Goods that must be consumed together with no partial consumption; the consumer cares only about the total bundle price. Topic 4

Each firm over a complementary component marks up independently, stacking markups and raising the final price. Topic 4

The harm one firm's price hike imposes on rivals' revenues by reducing total demand in a complementary-goods market. Topic 4

Merging complementary/upstream-downstream firms to maximise joint profit on the total price, internalising the Pricing Externality and reversing Double Marginalization. Topic 4

An upstream producer sells to a downstream retailer, each marking up; independent optimisation yields Double Marginalization. Topic 4

A firm with monopoly power over one component of a complementary bundle, pricing it while taking the others' prices as given. Topic 4

A firm's profit-maximising own strategy as a function of the rival's; its intersection with the rival's is the Nash Equilibrium. Topic 4

How equilibrium outcomes change as a parameter (most often the number of firms $N$) changes. Topic 4