Advanced Microeconomics: Information Economics

Credits: 
2.0
ECTS Credits: 
4.0
Term: 
Winter
Course Description: 

To familiarize students with the basic concepts, models, and methods in information economics, the study of the effects of information asymmetries on economic outcomes. The topics covered are:

 

  • Adverse Selection in Markets

◦     Akerlof's lemons model

  • Nonlinear Pricing

◦     The basic two-type model of hidden information

◦     Competitive screening

  • Moral Hazard

◦     The basic two-effort model of hidden action

◦     Career concerns

  • Mechanism Design

◦     Pivotal mechanisms

◦     The revelation principle

◦     Auction theory

Learning Outcomes: 

Understanding of the basic models used to capture the various effects of asymmetric information: adverse selection, nonlinear pricing, moral hazard, mechanism design. Learning techniques to solve these models. Ability to spot when asymmetric information is an important aspect of an economic situation, and to identify the type of asymmetry at play and the modeling tools to use.

Assessment: 

To be determined.

The final will be held in the final week of class. The grade will be determined entirely by the final.

Prerequisites: 

Micro I and Micro II

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