(Others with EC10044, MN10006 and placement experience should undertake preparatory reading).
Aims: This course uses economics to investigate the incentives generated by a range of contractual relationships. Students will link economic ideas to their own experiences in the workplace, and they will develop their written and oral communication skills.
Learning Outcomes:
By the end of this unit, the student should be able to:
* Understand the concepts of incentive compatibility and individual rationality.
* Apply the models developed in the module to novel environments.
* Understand and articulate the key themes developed in the module.
Skills:
Economic analysis (T, A)
Critical thinking (T,A)
Written communication (T,A)
Oral presentation (F)
Content:
Incentives are an integral part of many areas in economics, and so the topics examined in the course come from a range of economic disciplines. The course examines the application of principal-agent models to labour markets, capital markets, insurance markets, and corporate governance issues. Some of the topics addressed in the course will be: The use of pay systems to influence the behaviour of managerial and non-managerial employees; transaction costs as the reason for the existence of contracts; the importance of institutional structures as a response to transaction costs; and moral hazard and adverse selection.
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