Games and contracts under asymmetric information

BEA508 Games and contracts under asymmetric information

  • Topics


    This half-course covers central topics in games and contracting under asymmetric information. A contract defines `the rules of the game¿ that the contracting parties play. Contracts are pervasive in economic relationships and transactions. The course presents relevant theory and equilibrium concepts, and applies the theory in several areas, including financial contracting, industrial organization, and the economics of regulation and public policy

  • Teaching


    The course will be taught intensively; 7 sessions a 3 hours over two weeks


    Tentative outline


    1.Bilateral static contracting I: Hidden information, screeningBD Ch 2

    Applications to nonlinear pricing and credit rationing


    2.Bilateral static contracting II: Hidden action, moral hazard.BD Ch 4

    Applications to managerial incentives and debt financing


    3.Bayesian games and mechanism designBD Ch7; FT Ch 6-7

    Applications to bilateral trading and auctions


    4.Dynamic games of incomplete information. MWG 9,13; FT 8

    Perfect Bayesian and Sequential equilibrium. Refinements. Signaling.

    Applications in labor economics and corporate finance


    5.Dynamic adverse selection.BD Ch 9

    Coasian dynamics; regulation


    6.Dynamic moral hazard.BD Ch 10

    Bilateral relational contracts, implicit incentives and career concerns


    7.Incomplete contracts and institutional design.BD Ch11-12

    Property rights and ownership. Financial structure and control


  • Required prerequisites

    Required prerequisites


  • Requirements for course approval

    Requirements for course approval


  • Assessment


    Take-home exam


  • Grading Scale

    Grading Scale

    Pass or fail.


  • Objective/course outline

    Objective/course outline



  • Semester


    Not offered academic year 2011/2012.

  • Literature



    P. Bolton and M. Dewatripont. Contract Theory, Cambridge (Mass.), MIT Press 2005

    A. Mas-Colell, M.D.Winston and J.Green. Microeconomic Theory. Oxford UP. 1995.

    D. Fudenberg and J. Tirole. Game Theory. MIT Press, Cambridge. 1991



ECTS Credits
Teaching language

Course responsible


 Professor. Trond E. Olsen, Department of Business and Management Science