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2018/2019 KAN-COECO1065U Contract, Agency and Game Theory
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| Contract, Agency and Game Theory |
Course information |
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| Language | English |
| Course ECTS | 7.5 ECTS |
| Type | Mandatory offered as elective |
| Level | Full Degree Master |
| Duration | One Semester |
| Start time of the course | Autumn |
| Timetable | Course schedule will be posted at calendar.cbs.dk |
| Max. participants | 50 |
| Study board |
Study Board for MSc in Advanced Economics and
Finance
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| Last updated on 19-02-2018 | |
Relevant links |
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| Course prerequisites | ||||||||||||||||||||||||||||||||||||||||||||||
| This is a mandatory course for the MSc in
Advanced Economics and Finance. It is assumed that students have
knowledge similar to the entry requirements for this programme. The
course has 41 confrontation hours and there is a high level of
interaction between lecturer and students, and in general a high
work load.
To sign up send a 1-page motivational letter, a 1-page CV, and a grade transcript to oecon.eco@cbs.dk no later than 24 April 2018. Please also remember to sign up through the online registration. |
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The exam in the subject consists of two parts:
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Contract and agency theory gives a fundamental understanding of motivation and coordination issues under asymmetric information. The theory hereby also provides an analytical basis of micro- and business economics. The course consists of three parts. In the first part, we cover game theoretical results and in particular, we discuss static games, dynamic games including repeated games, and Bayesian games. In the second part, the basic ideas of contract theory are presented. We will in particular analyse contracts, where one party has hidden information (adverse selection) and/or can take a hidden action (moral hazard). We will also discuss some more advanced models with multiple agents, multiple periods etc. In addition, we will cover key aspects of more general mechanism design and discuss incomplete contracts. The aim of this part is to get a good understanding of the basic trade-offs involved, e.g. motivation versus risk sharing, and the basic mechanisms (such as information collection, menu of contracts, signalling etc). The aim is also to train the students to actually make optimal contracts and related mechanisms in simple settings by formulation and solving the associated mathematical programmes. In the third part, we use the developed theories to analyse important economic issues in both organisational and market contexts. The choice of topics shall be coordinated with the other courses in the programme, but could naturally include subjects such as allocation of decision rights, relative performance evaluation, yardstick competitions and regulation, career concern, CEO payment schemes, capital acquisition, capital budgeting, transfer pricing etc. In this part we also develop a holistic approach to contract design. The aim is to give a systematic approach that can be used to design new contracts or improve existing ones. The students will be asked to analyse key characteristic of a specific contract, e.g. a contract used in an actual supply chain. The course builds on decision theory, game theory and microeconomics. A good understanding of mathematics and statistics is an advantage. |
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| Description of the teaching methods | ||||||||||||||||||||||||||||||||||||||||||||||
| Lectures, exercises and case analyses. | ||||||||||||||||||||||||||||||||||||||||||||||
| Feedback during the teaching period | ||||||||||||||||||||||||||||||||||||||||||||||
| Feedback is provided in numerous ways throughout
the course:
During office hours, we can discuss particular problems and give advice on individual academic development questions During classes, we will do have small exercises and discussions of solutions suggested by (groups of) students The midterm analysis of a case is presented to the teacher, an industry case provider, and the class in general and some feedback will be provided directly to the groups The course is evaluated by the students and the teachers discuss the evaluations with the students. |
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| Further Information | ||||||||||||||||||||||||||||||||||||||||||||||
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Part of this course may also be taken as a PhD course for a limited number of PhD students. |
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| Expected literature | ||||||||||||||||||||||||||||||||||||||||||||||
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An Introduction to the Economics of Information, Ines
Macho-Stadler & K- David Perez-Castrillo, OUP (2nd edition)
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