Faculty of Business Studies and Economics

Contract Theory

Due to Professor Weinschenk's research semester in SS24, the lecture will only be offered in the form of videos, which will be made available in the OLAT course. However, Professor Weinschenk will offer several Q&A sessions to clarify content-related questions (dates will be announced via OLAT) !!!

General information

Lecturer

Prof. Dr. Philipp Weinschenk

Semester

Summer term

Date / Room

Due to Professor Weinschenk's research semester in SS24, the lecture will only be offered in the form of videos, which will be made available in the OLAT course.

However, Professor Weinschenk will offer several Q&A sessions to clarify content-related questions (dates will be announced via OLAT).

Module number

WIW-VT-M-7

CP

4,5

Language

English

KIS

Link

OLAT

Link

Module manual

Link

Master's specialization

Economic Theory

Environmental and Industrial Economics

Financial Economics

Industrial Economics

Content

Contract theory is concerned with how economic actors (especially companies) conclude contracts in order to minimise or overcome incentive problems. In most cases, asymmetric information between the actors is assumed. A typical question is, for example, how a company can optimally motivate its managers by means of incentive contracts. Contract theory is very mathematical and makes intensive use of various game theory concepts. Contrary to what the name might suggest, prior legal knowledge is not required.

The following core topics are discussed:

  •     Principal-agent models
  •     Incentive and participation conditions
  •     Hidden information: Lemons problem, screening, self-selection, signalling
  •     Hidden action: risk premium, limited liability, team problems
  •     Dynamic extensions and tournaments
  •     Applications in industrial economics & finance

Lecture slides