Hidden Information, Screening and Signaling (Parts of Chapter 2 and 3*)

Hidden Action, Moral Hazard (Parts of Chapter 4)

Moral Hazard: Extensions and Applications

- Moral Hazard in Teams: Unobservable Individual Output (see Chapter 8.1.1)

- Multiple Signals (see Chapter 8.1.3)

- Relative Performance Evaluation and Tournaments (see Chapter 8.1.4)

- Some Remarks on Multiple Multiple Tasks

Topics of Interest to be decided in class

(* Chapter references refer to Bolton and Dewatripont’s book.)

The course provides a thorough introduction to contract theory, in particular, hidden information (screening and signaling) and hidden action (moral hazard) for doctoral students. Contract theory has been successfully applied in economics, finance, organization, management, and corporate law. The course is intended to provide participants with the knowledge to understand and analyze state-of-the-art papers in this field, as well as to do own research in this area. Special emphasis is put on understanding the implications of certain assumptions and avoiding potential problems when choosing the structure of the model. The course will follow closely the book “Contract Theory” by Patrick Bolton and Mathias Dewatripont; in particular chapters 1 to 4. Participants are required to follow the relevant chapters in the book and to carefully study the exercise questions at the end of this handout.

Lecture, in class discussion, excercises, presentation of papers.

Exam, homework exercises, presentation of a paper, which will be assigned in class.

You have to register via e-mail!