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| Module Availability |
| Autumn |
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| Assessment Pattern |
| Unit(s) of Assessment |
Weighting Towards Module
Mark (%)
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| 2 hour Examination |
70
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| Coursework test 1 |
10
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| Coursework test 2 |
20
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Qualifying Condition(s)
A weighted aggregated mark of 40% is required to pass the module |
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| Module Overview |
| This module looks at recent developments in microeconomic theory in relation to the role of information in the economy. It studies models of the basic issues contract theory and asymmetric informaiton (moral hazard and adverse selection) and extends these to dynamic versions of these modules. The module considers soem of the applications of these models (e.g. insurance, labour market contracts, natueal monopoly regulation) and presents some of the recent breakthroughs in the empirical analysis of contracts. Presentation of the material involves mathematical tools that have been taught in levels 1 and 2 (algebra, calculus, constrained and unconstrained optimisation) |
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| Prerequisites/Co-requisites |
| None |
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| Module Aims |
- to demonstrate how standdard economic modules and results are altered by the introduction of asymmetric information
- to help students to appreciate how many real-world phenomena can be rationalised with the aid of asymmetric information models
- to demonstrate the difficulty and value of empirical research that aims to test asymmetric information contact models
- to provide students with tools that help them to evaluate standard economic models
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| Learning Outcomes |
At the end of this module, students who have taken it seriously should be able to:-
- set out and explain the basics of the principal-agent problems
- apply these 'basics' to moral hazard and adverse selection settings
- explain how various real world outcomes(such as insurance deductibles, warranties and performance pay) can be rationalised in a principal-agent setting
- demonstrate how regulation with asymmetric information takes place
- evaluate basic models of contract based on empirical work
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| Module Content |
Indicative module content includes:-
- baseline principal-agent model
- moral hazard models
- adverse selection models
- signalling and screening models
- dynamic models
- applications from insurance, employment, regulation
- empirical analysis of contracts and incentives
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| Methods of Teaching/Learning |
| Lectures (11) and Tutorials (2) |
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| Selected Texts/Journals |
| A selection of journal articles will be used during the module, but the module will be based on the content and structure of 'An Introduction to the Economics of Information Incentives and Contracts' 2nd edition by Ines Macho-Stadler and J David Perez-Castrillo, OUP, 2001, and 'Asymmetric Information' by Brian Hillier, McMillan, 1991 |
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| Last Updated |
10 March 2011 |
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