Course and Examination Fact Sheet: Spring Semester 2016
8,326 | 9,332: Economics of Information
ECTS credits: 4
Overview examination/s
(binding regulations see below)
Decentral ‑ Written examination (67%, 90 mins.)
Decentral ‑ examination paper written at home with presentation (individual) (33%)
Attached courses
Timetable ‑‑ Language ‑‑ Lecturer
8,326,1.00 Economics of Information ‑‑ English ‑‑ Epper Thomas Course information
Course prerequisites
Microeconomics I and II
Course content
In order to make decisions, economic agents require information. Optimal policies, contracts and incentive schemes are based on knowledge about how this
information is acquired, processed and transmitted within the economy. Furthermore, many decision situations are characterised by distrust in the model of the
world. Decision maker should therefore implement decision rules accounting for the possibility that their model is misspecified or that it is only an approximation
to a unspecified and unknown truth. This course provides an introduction to information theory and its application to economics. Economic agents only have limited information­acquisition and
processing capabilities, and, hence, they do not hold rational expectations as posited by traditional macroeconomics. Integrating such capacity constraints into
economic theory generates numerous important insights, such as an explanation for consumer inertia and the stickiness of prices and wages. Similarly,
information­theoretic concepts provide an approach to deal with situations where there is uncertainty about the model in use (i.e. the data­generating process).
Such approaches are particularly useful for developing policy recommendations which are robust to model misspecification and for specifying econometric models
linking cause to consequence. Other topics covered by the course comprise (i) mechanism design and scoring rules, e.g. how institutions could be constructed to
reveal agents’ private information, (ii) search and sorting, i.e. when it is optimal to stop searching for potentially better alternatives (e.g. job search) and how
certain agents can be selected into particular treatments, and (iii) the price and value of information, i.e. how much agents are willing to pay for information
given their preferences. Applications to policy making and the optimal design of contracts are discussed. The course covers recent advances in the field of
information economics.
Course structure
The course will take place during the second half of the semester. It is structured as follows:
1. A primer to information theory
2. Bounded rationality, rational inattention and inertia
3. Model uncertainty/misspecification and robust control
4. The price and value of information, bundling and transmission of information
5. Search problems, optimal stopping rules and sorting
6. Mechanism/market/contract design and scoring rules
Course literature
Required readings (journal articles) will be made available on StudyNet. There is no official textbook.
Additional course information
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Fact sheet version: 3.0 as of 01/26/2016, valid for Spring Semester 2016
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Examination information
Examination sub part/s
1. Examination sub part (1/2)
Examination time and form
Decentral ‑ Written examination (67%, 90 mins.)
Remark
‑‑
Examination­aid rule
Extended Closed Book
The use of aids is limited; any additional aids permitted are exhaustively listed under ʺSupplementary aidsʺ. Basically, the
following is applicable: At such examinations, all the pocket calculators of the Texas Instruments TI‑30 series and bilingual dictionaries without
hand‑written notes are admissible. Any other pocket calculator models and any electronic dictionaries are inadmissible.
In addition, any type of communication, as well as any electronic devices that can be programmed and are capable of
communication such as notebooks, tablets, PDAs, mobile telephones and others, are inadmissible.
Students are themselves responsible for the procurement of examination aids.
Supplementary aids
No supplementary aids permitted.
Examination languages
Question language: English
Answer language: English
2. Examination sub part (2/2)
Examination time and form
Decentral ‑ examination paper written at home with presentation (individual) (33%)
Remark
‑‑
Examination­aid rule
Term papers
Term papers must be written without anyone elseʹs help and in accordance with the known quotation standards, and
they must contain a declaration of authorship.
The documentation of sources (quotations, bibliography) has to be done throughout and consistently in accordance with
the APA or MLA standards. The indications of the sources of information taken over verbatim or in paraphrase
(quotations) must be integrated into the text in accordance with the precepts of the applicable quotation standard, while
informative and bibliographical notes must be added as footnotes (recommendations and standards can be found, for
example, in METZGER, C. (2013), Lern‑ und Arbeitsstrategien (11th ed., 3rd printing). Aarau: Sauerländer).
For any work written at the HSG, the indication of the page numbers both according to the MLA and the APA standard is
never optional.
Where there are no page numbers in sources, precise references must be provided in a different way: titles of chapters or
sections, section numbers, acts, scenes, verses, etc.
For papers in law, the legal standard is recommended (by way of example, cf. FORSTMOSER, P., OGOREK R. et
SCHINDLER B. (2014, Juristisches Arbeiten: Eine Anleitung für Studierende (5. Auflage), Zürich: Schulthess, or the
recommendations of the Law School).
Supplementary aids
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Fact sheet version: 3.0 as of 01/26/2016, valid for Spring Semester 2016
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Examination languages
Question language: English
Answer language: English
Examination content
The exam consists of two parts:
1) A written exam: The written exam tests the understanding of the concepts discussed in the lecture and the content of the
required readings. Students should be able to explain and interpret particular findings using their knowledge from the course.
They should also be able to solve mathematical exercises (examples will be provided during the lecture).
2) Term paper and presentation: A selection of case studies will be provided. Each case study is solved by a group of 3‑5 students.
Every student writes a short individual solution proposal. The group presents the solution at the end of the course. The proposed
solution will be (critically) discussed.
Examination relevant literature
Relevant for the written examination are (i) the handouts provided during the course, (ii) further information provided during
the lectures and (iii) the required readings. All relevant documents will be made available via StudyNet. Supplementary readings
will be provided, but their content will not be tested in the exam.
Some case studies will require additional readings. The content of these readings is not relevant for the written exam.
Please note
We would like to point out to you that this fact sheet has absolute priority over other information such as StudyNet,
faculty members’ personal databases, information provided in lectures, etc.
When will the fact sheets become binding?
Information about courses and examination time (central/decentral and grading form): from the start of the bidding
process on 28 January 2016
Information about decentral examinations (examination‑aid rule, examination content, examination relevant
literature): after the 4th semester week on 21 March 2016
Information about central examinations (examination‑aid rule, examination content, examination relevant
literature): from the start of the enrolment period for the examinations on 11 April 2016
Please look at the fact sheet once more after these deadlines have expired.
Fact sheet version: 3.0 as of 01/26/2016, valid for Spring Semester 2016
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