Syllabus

LEARNING OUTCOMES

This course introduces the students to topics and methods in modern information economics at the graduate level. After taking this course, the students are familiar with the analytical techniques used in microeconomics and have the necessary skills for modeling interactions under incomplete information.

Credits: 5

Schedule: 14.03.2022 - 09.05.2022

Teacher in charge (valid for whole curriculum period):

Teacher in charge (applies in this implementation): Jan Knöpfle

Contact information for the course (applies in this implementation):

Instructor: 

Jan Knoepfle 

email: jan.knoepfle@aalto.fi

office hours: by appointment (in person or over Zoom)

TA: 

Eero Mäenpää

email: eero.maenpaa@aalto.fi 

office hours: by appointment (in person or over Zoom)

Please feel free to email either of us and make active use of office hours, especially in case of struggle with the problem set. 

CEFR level (valid for whole curriculum period):

Language of instruction and studies (applies in this implementation):

Teaching language: English. Languages of study attainment: English

CONTENT, ASSESSMENT AND WORKLOAD

Content

• valid for whole curriculum period:

  Adverse selection and mechanism design.

  Moral hazard and imperfect monitoring.

  Dynamic models of incomplete information including signaling and cheap talk.

  Selected applications, for example: auctions, bargaining, market microstructure, reputation formation.

• applies in this implementation

  The course consists of three main blocks including the following topics

  1. Adverse Selection and Mechanism Design: Revelation Principle, Incentive Compatibility and Envelope Theorem, Revenue Equivalence, Optimal Auctions, Efficiency and VCG Mechanism  
     
     
  2. Moral Hazard and Contracts: Incentive Compatibility and First-order Approach, Risk Sharing, Limited Liability
     
     
  3. Sender-Receiver Games: 
  
  

Assessment Methods and Criteria

• valid for whole curriculum period:

  Exam and assignments

• applies in this implementation

  To pass the course, we require two things:

  
  

  1. Solving at least 50% total of the exercises in advance of the sessions. There will be 4 exercise sessions, each with a problem set that will be posted on the course page in advance. Submit your solutions before each session onto the MyCourses problem set assignment section.

  
  

  2. Passing the exam, which will be held shortly after the course. There is one re-take possibility later in the spring.

  
  

  The grade for the course is based on the exam only.

  
  

Workload

• valid for whole curriculum period:

  - Contact Teaching 24h

  - Exercise sessions 8h

  - Exam 4h

  -Independent work 124h

• applies in this implementation

  • Lectures will be Mon and Tue 10-12 in Economicum seminar room 3-4
  • Exercise sessions Mon 14-16 in Economicum seminar room 3-4. The TA will review the previous week's problem set. Dates: 21.03;  28.03;  04.04; and 02.05.

  Lectures will not be recorded. I upload completed notes after each lecture (see below) for self study in case you miss a lecture due to time constraints. 
  If you cannot make it to Economicum physically, especially students based outside Helsinki, please reach out to me before the lectures and we can arrange for a live stream over zoom. I strongly encourage in-person attendance whenever possible.

  Exercise sessions will not be streamed. Model solutions for the problem sets will be uploaded after.

DETAILS

Study Material

• applies in this implementation

  I will upload slides in advance of the lectures. These will be completed with handwritten notes during lectures and uploaded with notes after the lectures.

  
  

  Lectures will be based on:

  • Mailath: Modeling Strategic Behavior: A Graduate Introduction to Game Theory and Mechanism Design, World Scientific Publishing. Click here for a free pdf download. 
    

  
  

  Supplementary and more specialised textbooks for different parts are

  • Börgers: An Introduction to the Theory of Mechanism Design, Oxford University Press.
  • Mas-Colell, Whinston, Green: Microeconomic Theory, Oxford University press 
  • Salanié: The Economics of Contracts, MIT Press.
  • Krishna: Auction Theory, Academic Press.

  
  

  
  

Substitutes for Courses

• valid for whole curriculum period:

  Substitutes for Courses

Prerequisites

• valid for whole curriculum period:

  Prerequisites

SDG: Sustainable Development Goals

8 Decent Work and Economic Growth

FURTHER INFORMATION

Further Information

• valid for whole curriculum period:

  Helsinki GSE course. More information on the course in HSGE study guide: https://www.helsinkigse.fi/courses/
  Registration in Sisu.

  Teaching Language : English

  Teaching Period : 2022-2023 Spring IV
  2023-2024 Spring IV

Description