14.129: Contract Theory

Fall 1999 Syllabus (Tentative)

Professors Susan Athey and Bengt Holmstrom

For course info, see the course home page at http://web.mit.edu/athey/www/14.129/

Course Overview

This course is part of the economics department field sequence in microeconomic
theory. The course is designed to provide a rigorous treatment of the tools
of contract theory, focusing in particular on models with hidden actions and
hidden information. Topics include moral hazard, adverse selection,
mechanism design (with a special focus on auction theory), incomplete
contracts, and financial contracting.

The course is highly required for students who intend to do theoretical
research in microeconomic theory or any of the applied microeconomic
fields. The tools developed in the course have become standard
for economic modelling in many areas.

Prerequisites and Enrollment

This class is intended primarily for PhD students in the economics department
and Sloan school PhD students intending to do formal economic theory
in their dissertations. Due to its rigor and intensity, it will probably not
serve the needs of master's students or undergraduates very well.

The prerequisite for the course is 14.121, but students with only
that background may find the course too difficult. 14.122 and
especially 14.124 (which treats many of these topics at an
introductory level) are highly recommended.

Course Requirements

There will be approximately six to eight problem sets, which will be
graded and will count 20% of the grade. There will also be a final exam.
Details will be arranged in class.