TrainingsDE 2ème/3ème cycleDESU Magistère Ingénieur EconomisteCoursesInformation asymnetries in economics and finance

DESU Magistère Ingénieur EconomisteUE Information asymnetries in economics and finance

Content

This course develops the modern theory of market failures due to information asymmetries. Specifically it focuses on models related to finance.

Course overview :

Chapter 1. Reminders : two theorems of normative economics

- Competitive equilibrium and efficiency in an exchange economy

- The role of information

Chapter 2. Asymmetry of information, introduction

- Adverse selection and moral hazard

- Simple examples

Chapter 3. Adverse Selection

- General model and the principle of revelation

- A model of delegation

- Variations : timing , outside Options

Chapter 4. Principal informed - Signalling

Chapter 5. Applications and Examples in finance

- Bid ask spread

- Credit Rationing

- Insurance

Chapter 6. Moral hazard

- The problem : examples

- The task delegation model

- Trade off incentive / risk sharing-

- Variations : The continuous case

Chapter 7. Applications and Examples in finance

- Insurance

- Project financing

Chapter 8. Extensions

- Repeated Relations

- Commitment

Professional skills

Mastering the economic reasoning when asymmetric information and strategic behavior are prominent.

Identify phenomena due to asymmetric information in finance.

Language used

Main language used by this course: Anglais.

Bibliography

  • The Theory of Incentives, JJ Laffont D Martimort, Princeton
  • The Theory of Corporate Finance, J. Tirole MIT press

Structure and organisation

Course with exercise sessions.

THE TRAININGS WHICH USE THIS COURSE