Organisations, Economics and Incentives

This subject is concerned with the economics of asymmetric information, when agents may have private knowledge, take hidden actions, and attempt to manipulate the knowledge, information and incentives of others. Using game theory and information economics it will cover the main techniques and results of principal-agent theory and contract theory. It will introduce students to the principles of economic design in asymmetric information environments. These tools will be applied to a variety of topics and case studies, performance incentives, regulation, government procurement, structure of insurance markets, monopoly behaviour, agricultural contracts and share cropping.

• 1Understand the concepts of economics of information and be able to apply them to explain the contracts within organisations; and
• 2Analyse a firm's behaviour under different contractual structures.