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Personnel Economics (ECO-AD-PERSONECO)

ECO-AD-PERSONECO

Description

This course offers an overview from the perspective of an applied economist (therefore, with many concrete examples) of the main concepts and theories proposed by economists to study human relationships characterized by the presence of uncertainty and private information of the parties involved. A “fil rouge” throughout the course will be the search for answers to a basic question in (but not only) labor economics: should the functioning of free market forces be limited in the interest of the, supposedly, weaker agents, i.e., the workers?

We will start by considering situations in which one party has a characteristic that cannot be observed by the other party. These situations can lead to equilibria with adverse selection (i.e., only subjects with the least attractive private endowment offer themselves for a relationship) and, in some cases, to the complete collapse of the possibility of a relationship. We will study if and how the informed party may try to signal her private characteristics or whether the least informed party can design mechanisms to screen the best partners for the relationship.

The next step will be to consider situations in which one party may take actions that cannot be observed by the other
party. In these cases, it may happen that the least informed party would like the potential partner to take certain actions but cannot be sure that these actions will actually be taken. Economic theory studies different solutions to this problem, some of which will be considered in the course. Applications of these concepts and problems can be found in many aspects of our daily lives. During the course, we will consider examples drawn from the economics of labor relations, financial contracts, insurance contracts, education, the family, gender issues, the law, and many more.

The evaluation will be based on a take-home assignment.

ENROL FOR THIS COURSE