University of St Andrews

Key information

SCOTCAT credits : 20

ECTS credits : 10

Level : SCQF level 9

Semester: 2

Planned timetable: To be arranged.

Incentives economics (also known as economics of information and contract theory) studies interactions between economic agents in the presence of information asymmetries, such as sellers being better informed than buyers about product quality, or workers knowing better than employers the cost of exerting effort in a given task. Incentives economics is part of the core toolkit of modern graduate-level micro- and macroeconomics. This module introduces basic models featuring risk-sharing, private information and moral hazard, and covers a selection of applications among the following: workers compensation, corporate finance, equal pay communes, pricing, insurance, and higher education.

Relationship to other modules

Pre-requisite(s): Permission of the Economics Honours Adviser

Learning and teaching methods and delivery

Weekly contact: 20 hours of lectures over 11 weeks, 1-hour tutorial (x 5 weeks).

Scheduled learning hours: 25

Guided independent study hours: 175

Assessment pattern

As used by St Andrews: Coursework (Quizzes) = 10%, Class Test = 30%, 2-hour Written Examination = 60%

As defined by QAA
Written examinations : 75%
Practical examinations : 0%
Coursework: 25%

Re-assessment: 2-hour Written Examination = 100%

Personnel

Module coordinator: Dr L Bridet
Module teaching staff: Luc Bridet
Module coordinator email lb222@st-andrews.ac.uk

Intended learning outcomes

• Manipulate and apply the core models of bilateral contracting under symmetric information
• Manipulate and apply the core models of bilateral contracting under asymmetric information pre-contract (hidden information) and post-contract (hidden action)
• Explain empirical observations in labour markets, in retail, and within firms using the core models
• Relate contracting problems to insurance/incentives trade-offs, rent extraction/efficiency trade-offs, and selection/participation margins