Information Economics

2018/2019

Academic Year

ENG

Instruction in English

3

ECTS credits

Delivered at:

Department of Economics

Course type:

Elective course

When:

3 year, 1 module

Course Syllabus

Abstract

We will study models featuring informational asymmetries, and their consequences on both micro and macroeconomic behavior. On the theoretical level, the course will introduce students to the modeling framework ofadverse selection, signaling, screening, principal-agent problem, auction theory, global games and rational inattention. On the level of applications, we will look closer into insurance market, pricing, financial bubbles,issues of central banking and labor market.

Learning Objectives

• study of the role of information in economic modeling

Expected Learning Outcomes

• Understand consequences for the character and efficiency of the interaction between individuals and organizations, when one party has more or better information on some aspect of relationship.
• Know standard formats of the auctions
• Know how to evaluate the value of information.
• Know the ways to measure uncertainty
• Understand the consequences of endogenous information acquisition

Course Contents

• Information asymmetries
  - Adverse Selection - Signaling - Screening Utility Maximization and Choice
• Principal-Agent Problem
  - Hidden Actions (Moral Hazard) - Hidden Information(Menu of Contracts)
• Private Value Auctions
• Global Games
• Endogenous Information Acquisition (mostly Rational Inattention)

Assessment Elements

• activity in the class
• in-class test
• final exam

Interim Assessment

• Interim assessment (1 module)
  0.1 * activity in the class + 0.6 * final exam + 0.3 * in-class test

Bibliography

Recommended Core Bibliography

• Krishna, V. (2010). Auction Theory (Vol. 2nd ed). Burlington, MA: Academic Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=297062

Recommended Additional Bibliography

• Christian Merkl. (2012). Veldkamp, L.: Information Choice in Macroeconomics and Finance. Journal of Economics, (1), 97. https://doi.org/10.1007/s00712-012-0282-8