Module Identifier EC30610  
Academic Year 2007/2008  
Co-ordinator Professor Peter R Midmore  
Semester Semester 2  
Other staff Mr Oliver Marnet, Professor Peter R Midmore, Mrs Sangeeta Khorana, Mr Dennis A Thomas  
Pre-Requisite EC30220  
Course delivery Lecture   10 Hours.  
  Seminars / Tutorials   4 Hours.  
Assessment TypeAssessment Length/DetailsProportion
Semester Exam1.5 Hours  100%
Supplementary Exam1.5 Hours  100%

Learning outcomes

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


This module extends the microeconomic analysis of choice covered in EC30230 to consider choice under conditions of uncertainty. We then develop the closely-related issue of asymmetric information and the related problems of market failure, adverse selection and moral hazard. Applications to the financial market are addressed in detail.

Brief description

The module consists of 12 lectures plus 4 classes per student. Classes will be based on the assignments distributed in lectures. The opportunity to write and receive comments on a voluntary, non-assessed essay will also be offered. Essay titles will be distributed during lectures.

In addition to attending lectures and tutorials, it is important that you spend an apporopriate amount of time in private study. Since this module constitutes one sixth of your workload for this semester, and assuming a 36 hour working week, you should expect to spend about 5 hours per week studying for this module, of which only 1.5 hours is formally timetabled.


Choice under Uncertainly

   expected utility
   risk preferences: risk aversion, risk loving, risk neutrlity
   simple application: demand for insurance

Markets with Asymmetric Information

   adverse selection
   market failure
   moral hazard

Uncertainly and asymmetric information in financial markets

   asymmetric information problems in financial markets and protection mechanisms
   applications to corporate finance
   macroeconomic applications

Reading Lists

** General Text
Nicholson, W (1992) Microeconomic Theory: basic principles and extensions Dryden Press

** Recommended Text
Bebczuk, R (2003) Asymmetric Information in Financial Markets Cambridge University Press
Bebczuk, Ricardo Asymmetric Information in Financial Markets Camb.U.P. 0521797322
Eaton, B.Curtis Intermediate Microeconomics edition 3r.e.of "Microeconomics" . Prentice-Hall 013147331X
Pindyck, R and D Rubinfeld (1992) Microeconomics Maxwell Macmilland International
Varian Hall (1993) Intermediate Microeconomics W W Norton
** Supplementary Text
Eaton, B C, Eaton D F and W A Douglas (1999) Microeconomics Prentice Hall Canada
Katz, M L and H R Rosen (1998) Microeconomics McGraww-Hill
Katz, Michael L. Microeconomics edition Internat.3r.e. . McGraw 0071153543
Nicholson, Walter Microeconomic Theory edition 8r.e. . South Western Educational Publishing 0030335930
Varian, Hal R. Intermediate Microeconomics edition 5r.e. . W.W.Norton 0393973719


This module is at CQFW Level 6