[Forside] [Hovedområder] [Perioder] [Udannelser] [Alle kurser på en side]
LEARNING OBJECTIVES:
The students should be able to
Part I
• Formulate economic problems as proper formal game forms, solve and
analyze them
• Reflect upon the information structure of a problem
Part II
• Reflect upon the equilibrium concepts and their relevance for a given
economic problem
• Reflect upon the main problems caused by asymmetric information
• Formulate, solve and analyze economic models of contracts and reflect upon
the underlying assumptions
• Generalize the models to real economic environments.
COURSE DESCRIPTION:
The purpose of the course is to build upon and extend the introductory analyses considered in previous microeconomic courses. The course consists of two parts - an introduction to game theory and an introduction to the economics of asymmetric information.
Game theory studies multi-person decision problems with strategic interactions. The study of game theory provides tools that can be used in a wide range of situations: firms competing in a market, bidders participating in auctions, bargaining, the role of threats, rewards, and punishments in long-term relationship.
The second part of the course will introduce students to informational asymmetries and how contracts deal, as well as possible, with such informational asymmetries. Applications of information economics and contract theory are widespread: industry regulation, incentive schemes for managers, workers and civil servants, insurance policies, pricing decisions, and optimal taxation.
COURSE SUBJECT AREAS:
Topics in game theory:
• Static games under complete information and applications
• Dynamic games under complete information and applications
• Static games under incomplete information and applications
• Dynamic games under incomplete information and applications
Topics in contracts and asymmetric information
• Adverse selection and signaling and applications
• Adverse selection: Hidden information and screening and applications
• Moral hazard and applications.
REQUIRED COURSES (progression):
The course assumes a solid foundation in microeconomic theory as well as the basic notions of non-cooperative game theory (acquired through the microeconomic courses during the first two years of the BA degree or comparable courses).
LECTURER:
Julia Nafziger.
TEACHING METHOD:
Lectures and tutorials with active student participation. Problem sets following each topic.
LITERATURE:
• Gibbons, R. (1992). A Primer in Game Theory, Harvester Wheatsheaf, Hemel Hempstead: UK. (circa 250 pages)
• Bolton, P., and Dewatripont, M. (2005). Contract Theory, The MIT Press. (Chapters 1 - 4) (circa 180 pages)
• Lecture notes (circa 150 pages)
A total of approx. 580 pages.
FORM OF ASSESSMENT:
4-hour written exam. At least 6 problem sets (including at
least 2 for the second part of the course) must be handed in and approved in order for the students to be admitted to the exam.
EXAMINATION AIDS ALLOWED: Only non-electronic Danish-English, English-Danish dictionaries.
