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ES30040: Economics of incentives

Follow this link for further information on academic years Academic Year: 2013/4
Further information on owning departmentsOwning Department/School: Department of Economics
Further information on credits Credits: 6
Further information on unit levels Level: Honours (FHEQ level 6)
Further information on teaching periods Period: Semester 2
Further information on unit assessment Assessment: CW 40%, EX 60%
Further information on supplementary assessment Supplementary Assessment: Reassessment not allowed
Further information on requisites Requisites: Before taking this unit you must take ES20011
Further information on descriptions Description: Aims:
The aim of this course is to provide an understanding of the effects of asymmetric information on the incentives of agents involved in various situations of economic interaction.

Learning Outcomes:
On completion of this course the student should be able to demonstrate an understanding of and be able to formally model moral hazard and adverse selection, and solve problems involving these concepts.

Ability to critically analyse problems characterised by asymmetric information and develop solutions.

This course is concerned with formal analysis of various situations of trade between agents who have different information. The specific topics that will be covered are:
(a) Auction Theory: Private value auction; the optimal design of auctions; common value auctions; the winner's curse;
(b) Non-linear pricing;
(c) Moral Hazard Theory: Principal-agent moral hazard problems; incentive problems in employment contracts; multiple agent problems;
(d) Adverse Selection Theory: The revelation principle; examples including the control of externalities, revelation of preferences for public goods, price discrimination and the regulation of a monopolist with private information.
Further information on programme availabilityProgramme availability:

ES30040 is Optional on the following programmes:

Department of Economics
  • UHES-AFB03 : BSc (hons) Economics (Full-time) - Year 3
  • UHES-AKB03 : BSc (hons) Economics (Full-time with Thick Sandwich Placement) - Year 4
  • UHES-AFB02 : BSc (hons) Economics and International Development (Full-time) - Year 3
  • UHES-AKB02 : BSc (hons) Economics and International Development (Full-time with Thick Sandwich Placement) - Year 4
  • UHES-AFB01 : BSc (hons) Economics and Politics (Full-time) - Year 3
  • UHES-AKB01 : BSc (hons) Economics and Politics (Full-time with Thick Sandwich Placement) - Year 4

* This unit catalogue is applicable for the 2013/4 academic year only. Students continuing their studies into 2014/15 and beyond should not assume that this unit will be available in future years in the format displayed here for 2013/14.
* Programmes and units are subject to change at any time, in accordance with normal University procedures.
* Availability of units will be subject to constraints such as staff availability, minimum and maximum group sizes, and timetabling factors as well as a student's ability to meet any pre-requisite rules.