Contract Theory

2024/2025

Academic Year

ENG

Instruction in English

3

ECTS credits

Delivered at:

Department of Economics

Course type:

Compulsory course

When:

2 year, 1, 2 module

Instructor

Kokovin, Sergey G.

Course Syllabus

Abstract

This course provides an overview of the classical as well as advanced topics in contract theory. We are going to start with the classical principal-agent models of screening and moral hazard and learn how managers create incentives for their employees. These models involve two parties: a principal (e.g. manager) and an agent (e.g. employee). The principal delegates a task to the agent by offering him a contact. In the moral hazard problem, the agent's actions are hidden (noncontractible), yet they affect an outcome that can be included in a contract. In the screening problem, the agent has some private information relevant to the task. In both problems, asymmetric information creates inefficiency. In the second part of the course we consider various extensions of these two problems to many agents and dynamic environment. At the end of the course we'll shift gears to a different area of market design and learn how to get married (matching theory).