ECON3016 - Economics of Information

Term 2



Aims:

One often encounters situations in which two agents are involved in a mutual agreement. Invariably, one economic agent has more information about a characteristic that is relevant to the agreement, than the other. In this module, we will study how agents deal with this information asymmetry by designing incentives and embedding them in contracts. We will also study the effects of information asymmetry on the prevailing market equilibrium. Applications of the theory include insurance, labour economics, industrial economics, and environmental economics.

Objectives:

By the end of the module, students should:

  • Be familiar with the different types of information asymmetries and their consequences in contract design and market equilibrium
  • Solve principal-agent models using appropriate mathematical techniques
  • Be familiar with empirical tests of information asymmetries
Taught by:
Antonio Cabrales
Assessment: The course comprises 20 hours of lectures and 4 compulsory tutorial classes with accompanying exercises. There will be a 2-hour unseen written examination in Term 3.
Suitable for:
3rd year Economics (L100), Phil/Econ (VL51), Math/Econ (G1L1/G1LC) and Econ/Stats (LG13) students.
Prerequisites: ECON2001: Microeconomics, and ECON2007: Quantitative Economics and Econometrics.
Moodle page:
ECON3016