Contracts and Organisations

This information is for the 2015/16 session.

Teacher responsible

Prof Gilat Levy 32L 4.31

Prof John Hardman-Moore 32L 4.14

Prof Philippe Aghion


This course is available on the MPhil/PhD in Accounting, MSc in Econometrics and Mathematical Economics, MSc in Econometrics and Mathematical Economics (2 Year Programme), MSc in Economics, MSc in Economics (2 Year Programme) and MSc in Environmental Economics and Climate Change. This course is available with permission as an outside option to students on other programmes where regulations permit.


Students must have completed Introductory Course in Mathematics and Statistics (EC400).

Course content

The course will cover topics from : contract theory, incomplete contracts, the economics of moral hazard and adverse selection in strategic settings,  dynamic theory of incentive contracts (efficiency of long-run relationships, short-term versus long-term contracts and renegotiation, static mechanism design and self-selection contracts (revelation principle for Baynesian-Nash and dominant strategy equilibria, static screening contracts) with applications to non-linear pricing, optimal auctions and regulation, and the theory of mechanism design with multiple agents (multiple agents screening and common agency).


20 hours of lectures and 10 hours of seminars in the MT. 20 hours of lectures and 10 hours of seminars in the LT.

Formative coursework

Two marked assignments per term.

Indicative reading

No one book covers the entire syllabus; a list of references will be provided at the start of the course. The following textbooks provide a treatment of part of the material presented in the course: Jean-Jacques Laffont, The Economics of Uncertainty and Information, MIT Press; D Fudenberg & J Tirole, Game Theory, MIT Press; Jean-Jacques Laffont & Jean Tirole, A Theory of Incentives in Procurement Regulations, MIT Press; Bernard Salanié, The Economics of Contracts: A Primer, MIT Press, Bolton, P., and M. Dewatripont (2005), Contract Theory, MIT Press, Hart, O. (1995), Firms, Contracts, and Financial Structure, Oxford University Press.


A three-hour written examination in the ST.

Non-EME students will be assessed as follows: A three-hour written examination in the ST (50%) and a 6000-word extended essay due at the beginning of the ST (50%).

Key facts

Department: Economics

Total students 2014/15: 12

Average class size 2014/15: 12

Controlled access 2014/15: Yes

Value: One Unit

Guidelines for interpreting course guide information