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Regular version of the site

Economics of Information

Academic Year
Instruction in English
ECTS credits
Course type:
Elective course
3 year, 3 module


Course Syllabus


The goal of this course is to introduce students to the role of information in Economics, and to cover related theories and applications. The course is divided into two parts. The first part deals with classical static models of strategic communication, disclosure, signaling and screening. The second part is focused on social learning and strategic experimentation. The main purpose of this part is to learn how these theories can be used to study interesting practical questions. The primary language of the course is English (conditional on no foreign students we can easily switch to Russian). Students should possess basic knowledge of calculus and probability theory.
Learning Objectives

Learning Objectives

  • Understand the role of information in Economics
  • Being acquainted with classical and modern ways to model information in Economics
  • Be able to solve basic and modified models covered in the course
  • Apply the concepts of the course to real world frameworks
Expected Learning Outcomes

Expected Learning Outcomes

  • Know the classical results of Information Economics
  • Understand how the information is transmitted between the economic agents.
  • Understand how the economic agents experiment and learn unknown fundamentals.
Course Contents

Course Contents

  • Adverse Selection/Asymmetric Information
    Lemon’s Market, Signaling, Screening, Moral Hazard
  • Information Transmission
    Cheap Talk and Reputation, Disclosure, Bayesian Persuasion, Global Games
  • Experimentation and Learning
    Clinical Trials and the Gittins Index, Social Learning, Strategic Experimentation
Assessment Elements

Assessment Elements

  • non-blocking Home Assignment 1
  • non-blocking Home Assignment 2
  • non-blocking Home Assignment 3
  • non-blocking Midterm Exam
  • non-blocking Final Exam
    The topics covered in the exam and in the midterm do not overlap. For the students who had a valid reason for not taking the midterm the final exam counts as 85% of the grade.
Interim Assessment

Interim Assessment

  • Interim assessment (3 module)
    0.45 * Final Exam + 0.05 * Home Assignment 1 + 0.05 * Home Assignment 2 + 0.05 * Home Assignment 3 + 0.4 * Midterm Exam


Recommended Core Bibliography

  • Bengt Holmstrom. (1981). Moral Hazard in Teams. Discussion Papers.
  • Dirk Bergemann, & Juuso Valimaki. (2006). Bandit Problems. Cowles Foundation Discussion Papers.
  • Dye, R. (1985). Disclosure Of Nonproprietary Information. Journal of Accounting Research, 123.
  • Emir Kamenica, & Matthew Gentzkow. (2011). Bayesian persuasion.
  • George A. Akerlof. (1970). The Market for “Lemons”: Quality Uncertainty and the Market Mechanism. The Quarterly Journal of Economics, (3), 488. https://doi.org/10.2307/1879431
  • Jung, W., & Kwon, Y. (1988). Disclosure When The Market Is Unsure Of Information Endowment Of Managers. Journal of Accounting Research, 146.
  • Lones Smith, & Peter Sørensen. (1999). Pathological Outcomes of Observational Learning.
  • Martin Cripps, Godfrey Keller, & Sven Rady. (2005). Strategic experimentation with exponential bandits.
  • Michael Spence. (1973). Job Market Signaling. The Quarterly Journal of Economics, (3), 355. https://doi.org/10.2307/1882010
  • Stephen Morris, & Hyun Song Shin. (2006). Global Games: Theory and Applications.
  • Vincent P. Crawford, & Joel Sobeli. (1982). Strategic information transmission.

Recommended Additional Bibliography

  • Callander, S. (2011). Searching and Learning by Trial and Error. American Economic Review, 101(6), 2277–2308. https://doi.org/10.1257/aer.101.6.2277
  • Ilan Guttman, Ilan Kremer, & Andrzej Skrzypacz. (2013). Not Only What But also When: A Theory of Dynamic Voluntary Disclosure ∗.
  • Strategic experimentation. (1999). Econometrica, 67(2), 349–374.
  • Viral V. Acharya, Peter M. DeMarzo, & Ilan Kremer. (2010). Endogenous Information Flows and the Clustering of Announcements. NBER Working Papers.