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ES30040: Economics of incentives

Follow this link for further information on academic years Academic Year: 2017/8
Further information on owning departmentsOwning Department/School: Department of Economics
Further information on credits Credits: 6      [equivalent to 12 CATS credits]
Further information on notional study hours Notional Study Hours: 120
Further information on unit levels Level: Honours (FHEQ level 6)
Further information on teaching periods Period:
Semester 2
Further information on unit assessment Assessment Summary: CW 40%, EX 60%
Further information on unit assessment Assessment Detail:
  • Group coursework (CW 40%)
  • Examination (EX 60%)
Further information on supplementary assessment Supplementary Assessment:
ES30040B - Resit Examination (where allowed by programme regulations)
Further information on requisites Requisites: Before taking this module 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 (Year 3)
  • UHES-AAB03 : BSc(Hons) Economics with Study year abroad (Year 4)
  • UHES-AKB03 : BSc(Hons) Economics with Year long work placement (Year 4)
  • UHES-AFB04 : BSc(Hons) Economics and Mathematics (Year 3)
  • UHES-AFB01 : BSc(Hons) Economics and Politics (Year 3)
  • UHES-AAB01 : BSc(Hons) Economics and Politics with Study year abroad (Year 4)
  • UHES-AKB01 : BSc(Hons) Economics and Politics with Year long work placement (Year 4)
  • UHES-ACB01 : BSc(Hons) Economics and Politics with Combined Placement and Study Abroad (Year 4)
  • UHES-ACB03 : BSc(Hons) Economics with Combined Placement and Study Abroad (Year 4)