EC30610 - UNCERTAINTY AND ASYMMETRIC INFORMATION

Module Identifier	EC30610
Module Title	UNCERTAINTY AND ASYMMETRIC INFORMATION
Academic Year	2001/2002
Co-ordinator	Ms Susan Charles
Semester	Semester 2
Pre-Requisite	EC30230
Course delivery	Lecture	10 Hours
	Seminars / Tutorials	4 Hours
Assessment	Exam	1.5 Hours	100%

Aims

This module extends the microeconomic analysis of choice covered in EC30230 to consider choice under conditions of uncertainty. Specifically, we consider choice in situations where the consequences of each option are unknown at the time of choice because they depend on future events. Having developed our basic model we then turn to consider the closely-related issue of asymmetric information, exploring how asymmetric information can lead to 'market failure' problems of adverse selection and moral hazard.

Learning outcomes

By the end of the module students should have an understanding of:

The expected utility hypothesis of choice under uncertainty;

Risk aversion and risk pooling;

Asymmetric information and the problems of adverse selection and moral hazard.

Reading Lists

Books
B Hillier. (1997) The Economics of Asymmetric Information. Macmillan ISBN 0312 16396 7
M L Katz and H R Rosen. Microeconomics.
W Nicholson. Microeconomic Theory.
H Varian. Intermediate Microeconomics.
L S Friedman. Microeconomic Policy Analysis.
B C Eaton, D F Eaton and D W Allen. Microeconomics. 4th.