Term:Spring

Course Code:

Campus:Main Campus

Academic Organization:Economics

Prerequisites:

Credit:2（32 teaching hours）

Course Components:Lectures Required

Course Note:Optional for economics and finance student

Course Description:

The main aim of this course is to introduce students to the role of information in economics more from a theoretical point of view. We will introduce how information impacts strategic behavior, market structure and pricing. Through the tools of lectures, cases, class discussion, we will touch on topics including moral hazard, adverse selection, signaling and auctions. Students are expected to have an in-depth understanding of the role of information in the economics and have the ability to analyze underline economic principle when facing such situations.

In economics, moral hazard occurs when there is asymmetric information between two parties and a change in the behavior of one party occurs after an agreement between the two parties is reached. Moral hazard is prevalent in the insurance industries, but it can also exist in employee-employer relationships. Adverse selection refers to the situation where due to information asymmetry, one side participate in trade selectively benefiting themselves the most while at the expense of the other side, like second-hand car market. In contract theory, signaling is the idea that one party credibly conveys information about itself to another party for the purpose of better contracting result. Auctions are also prevalent in daily life, like vehicle license auction.