19-20 EC3326: Contracts and Incentives

EC3326 is an introduction to contracts and incentives for undergraduate students. The module studies the effects of asymmetric information on the market equilibrium, the market outcomes, agents’ behaviour and incentives, and on contract design. The module focuses on situations in which agents are interested in reaching an agreement and one party possesses more or better information about a characteristic relevant to their agreement than the other party. In this context, it analyses how the markets work and how the agents deal with the information asymmetry by providing incentives and designing contracts. The theory studied in this module has a wide range of economics applications in diverse markets (e.g., insurance, labour, consumer goods) and areas (e.g., development, health, environmental, industrial economics). Some core concepts introduced in this module are: asymmetric information, moral hazard, adverse selection, and signaling.