Economic Design

This subject is not offered in 2016.

Estimated total time commitment of 120 hours per semester

or

None

None

For the purposes of considering request for Reasonable Adjustments under the Disability Standards for Education (Cwth 2005), and Student Support and Engagement Policy, academic requirements for this subject are articulated in the Subject Overview, Learning Outcomes, Assessment and Generic Skills sections of this entry.

It is University policy to take all reasonable steps to minimise the impact of disability upon academic study, and reasonable adjustments will be made to enhance a student's participation in the University's programs. Students who feel their disability may impact on meeting the requirements of this subject are encouraged to discuss this matter with a Faculty Student Adviser and Student Equity and Disability Support: http://services.unimelb.edu.au/disability

This subject is an introduction to Economic Design and the interaction of modern economic theory, economic policy and experimental economics. The subject will cover mechanism design, auction theory, contract theory, and the fundamental results on the limits to efficiency in asymmetric information environments. The theory will be illustrated with case studies of recent policy applications of economic design techniques.

On successful completion of this subject, students should be able to:

• Set up and solve contact design problems in asymmetric information environments;
• Analyse bidder behaviour in standard auction forms;
• Set up and solve auction design problems in common and independent private value environments;
• Explain and apply the Envelope Theorem, the Revelation Principle and the Revenue Equivalence Theorem, and their implications for auction theory and contract theory; and
• Explain the fundamental results of mechanism design and implementation theory on the limits to efficiency in asymmetric information environments.

• 1.5 hour mid-semester examination and one 3-hour end-of-semester examination (totalling 80% and split between the midterm and the final as the maximum of 10% for the midterm plus 70% for the final and 30% for the midterm plus 50% for the final) - 80% (10%+70% or 30%+50%, whichever is greater); and
• Five 400-word homework assignments (4% each) due in weeks 3, 5, 7, 9 and 12

You will be advised of prescribed texts by your lecturer.

This subject is not available as a breadth subject.

On successful completion of this subject, students should have improved the following generic skills:

• Written communication
• Collaborative learning
• Problem solving
• Team work
• Mathematical reasoning
• Application of theory to practice
• Interpretation and analysis
• Critical thinking

Students may not receive credit for both ECON90028 Economic Design and ECON40006 Economic Design.