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This module explores the contributions made by economic theory to several important economic problems. Although there are no formal prerequisites, the module is quite technical and students with weak quantitative background should be willing to catch up with constrained optimization (e.g., Lagrange & Kuhn-Tucker methods) and intermediate microeconomics (e.g., competitive markets vs monopolies). While the list of topics is generally quite flexible, the underlying theme will be the use of game theoretic modelling and the use of mathematical modelling and equilibrium concepts developed in economic theory.
This year the main topics will be on Information Economics: how the fact that different agents have access to different information can affect their behaviour in markets. Thus, firms do not know the ability of applicants while the applicants do, the owners of used cars have much more information on the cars than the buyers and so on.
The topics covered will be under the broad headings of:
Static bilateral contracting: problems of hidden information: (a) screening, (b) signalling.
Static bilateral contracting: problems of hidden action: moral hazard.
Applications: insurance markets, used car market.
King’s College London reviews the modules offered on a regular basis to provide up-to-date, innovative and relevant programmes of study. Therefore, modules offered may change. We suggest you keep an eye on the course finder on our website for updates.
Please note that modules with a practical component will be capped due to educational requirements, which may mean that we cannot guarantee a place to all students who elect to study this module.
Please note that the module descriptions above are related to the current academic year and are subject to change.