ECON 462Information Economics

Catalog

Prerequisites: Grade of C or better in ECON 360; also grades of C or better in college level statistics and calculus. This course is an introduction to the economics of information and uncertainty. We begin by studying decision-making under risk and the value of information, with applications to insurance, risk-pooling and investment. A major part of the course is devoted to the role of asymmetric information in market interactions, in particular the problems of hidden actions and hidden characteristics, both of which are common in the markets for credit, insurance, and labor, for example. Finally, we examine a particular mechanism that has been developed to counter asymmetric information problems, namely, auction. Format: Lectures, problem sets, occasional classroom experiments, one midterm examination, one final examination.