This module explores the contributions made by economic theory to several important economic problems. While the list of topics generally is 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 most famous example is due to George Akerlof, who introduced the idea of “adverse selection” in the used car market. These ideas have now been applied in a wide variety of economics and political settings and the module will study some of these applications in depth. Some of the questions we will try to answer are: Why is there unemployment? Why do forms offer lower premiums to insure who accept a high deductible? These questions cannot be answered in the standard paradigm.
*Please note that module information is indicative and may change from year to year.
Professor Amrita Dhillon
Module assessment - more information
1-hour mid-term examination (30%); 2-hour examination (70%)