MPhil Topics in Economic Theory 2025-26: Part 1

The topics for this course change every year.
I cover term 1; the second part is during term 2 and is taught by Ran Spiegler.

Course Description

Many of the most important decisions unfold over time. In part 1 of this course, we study how people make such decisions when faced with uncertainty, limited information, and evolving opportunities.

We focus on three fundamental challenges.
First: stopping. From accepting a job offer to selling a house or ending a search, timing is often the decision itself.
Second: searching. From browsing products to developing a technology, individuals must decide not just what to choose, but need to search for what is feasible.
Third: learning from others. People rarely make decisions in isolation – they observe, imitate, and respond to what others do.
Understanding these dynamics is key to understanding real-world behaviour in a variety of contexts, from product and technology adoption to the diffusion of misinformation.

This course brings together classic and modern models that address these questions, combining theoretical rigour with economic insight. While technically rooted, the emphasis is on understanding how decisions are made – and sometimes mis-made – in a variety of contexts, such as labour markets, online platforms, financial settings, and social environments.

The course will focus on discrete-time models with a wide variety of applications and has two main objectives. First, to develop tools to analyse discrete-time problems, which should be part of the toolkit of any economic theorist, but also those interested in cutting-edge research in macroeconomics (labour search), econometrics (sequential testing), and finance (option pricing). Second, to foster theoretical research and inspire theory-driven applied research by providing an overview of a collection of models spanning multiple topics of interest, in which time is of the essence.

In the final part of the course, students will present and discuss recent research that applies or extends these ideas. The goal is not just to teach tools, but to spark questions and inspire research.

This course is aimed at PhD students interested in topics and methods, and in theory, behavioural economics, and dynamic decision-making more broadly. A good grasp of probability theory, real analysis and optimisation is assumed. The course is open to students from outside UCL; please send me an email if you are interested.

Meeting Times and Location
Tuesday, 13:30-15:30 (TBC)
Meeting Dates: 30 September – 25 November 2025.

Topics

1. Stopping: Stopping rules and monotone problems. Application: job search.
   Lecture(s): 30 September.
   References: Ferguson (2008 Book); McCall (1970 QJE).
2. Stopping Again: Martingales and Bellman. Application: gambler's ruin, learning preference intensity.
   Lecture(s): 7, 14 October.
   References: Ferguson (2008 Book); Arrow, Blackwell, and Girshick (1949 Ecta); Gonçalves (WP).
3. Pandora's Boxes and Gittins Index. Application: directed search.
   Lecture(s): 14, 21 October.
   References: Weitzman (1979 Ecta); Gittins (1979 JRSS); Gittins and Jones (1979 Biometrika); Choi, Dai, and Kim (2018 Ecta).
4. Social Learning.
   Lecture(s): 28 October.
   References: Bikhchandani, Hirshleifer, and Welch (1992 JPE); Banerjee (1992 QJE); Smith Sørensen (2000 Ecta); Bikhchandani Hirshleifer Tamuz Welch (2024 JEL); Chamley (2010 Book).
5. Applications.
   Lecture(s): 11, 18, 25 November.
   Presentations by students on papers.

Materials will be posted below as the course progresses.

Presentations
The presentations are to be structured as follows: 30min discussion of the paper (motivation, model, results, proof intuition); 10min project idea; 5min discussion.
Please send me an email with your top 3 papers you would like to present by the end of October; see this list for inspiration.