Descriptif
This course builds on ECO201 to go beyond the competitive equilibrium setting and introduce new causes of market failures. We aim to study how the presence of incomplete and asymmetric information affects the standard analysis of microeconomic theory. The starting point is that asymmetric information leads to market failures, which opens the question of how to regulate and appropriately design markets to solve or reduce these failures. We will present the basics of two important theories and methods which have been the core of the modern microeconomic analysis since 1970: signaling games and mechanism design. The students will learn new tools to analyze markets and interactions in the presence of incomplete and asymmetric information. They will also learn how to develop policy tools and design markets that mitigate the issues induced by the information structure.
The mathematical treatment is rigorous, but not as much as for a graduate-level course. This course will be thus most useful as a preparation for formal graduate studies in economics.
Objectifs pédagogiques
At the end of the course, students will:
- be able to use the tools of game theory with incomplete information to analyze economic situations
- understand the role of the major information frictions (e.g., adverse selection, moral hazard) on market inefficiencies
effectifs minimal / maximal:
4/Diplôme(s) concerné(s)
Parcours de rattachement
Pour les étudiants du diplôme Bachelor of Science de l'Ecole polytechnique
Vous devez avoir validé l'équation suivante : UE ECO201
ECO201
Format des notes
Numérique sur 20Littérale/grade américainPour les étudiants du diplôme Programmes d'échange internationaux
Pour les étudiants du diplôme Bachelor of Science de l'Ecole polytechnique
Vos modalités d'acquisition :
The final grade will be computed as follows:
- a final exam at the end of semester (2 hours, written, no materials allowed) will count for 50%
- a "tutorial" grade will incorporate two midterm exams (2 hours each, written, no materials allowed - 20% of the final grade) as well as homework handed out by the students each week, and a participation grade (30% of the final grade).
Remedial exams will take the form of a written exam (2 hours each, no materials allowed).
The final grade will take into account the tutorial grade and the grade obtained at the remedial exam (50% each).
Le rattrapage est autorisé (Note de rattrapage conservée écrêtée à une note seuil de 10)
- Crédits ECTS acquis : 5 ECTS
La note obtenue rentre dans le calcul de votre GPA.
Programme détaillé
The course is organized around five chapters:
❯ Chapter 1: Game theory under incomplete information
❯ Chapter 2: Asymmetric information, signaling and application to the insurance market
❯ Chapter 3: The principal agent model
❯ Chapter 4: Auctions and mechanism design
❯ Chapter 5: Market design and matching