A list of topics covered in this course is available in the calendar below.

Course Meeting Times

Lectures: 2 sessions / week, 1.5 hours / session

Recitations: 1 session / week, 1.5 hours / session


Microeconomic Theory I (14.121), Contract Economics (14.281), or permission of instructors.

Requirements (Overview)

  • Complete 4 homework assignments
  • Make a 25-minute presentation
  • No exams, no paper required. Students are encouraged to start, write, and present their papers.


The primary book for this course is:

Buy at MIT Press Buy at Amazon Bolton, Patrick, and Mathias Dewatripont. Contract Theory. Cambridge, MA: MIT Press, 2005. ISBN: 9780262025768.

Please see readings for more information.


There are 4 homework assignments. You will have at least two weeks to complete each one. (Some) will have a problem: to ask a question and provide an answer.


Paper is chosen by the student or suggested by the professor. Own relevant papers are allowed. Style: 25-minutes conference presentation. Includes: motivation, contribution, main points, and critical analysis. Also, would require written short report briefly outlining contribution of the paper and of related papers. In case, two or more related papers are presented by several students, one report from the group will suffice.

Students are also required to discuss the paper (and presentation) of at least one other student. (Since the presentations are made two per class, naturally presenters provide comments on each other). It is important to have these discussions as it engages at least two students on the same project.


Lec # topics
Games with Incomplete Information
1 Bayesian-Nash games
Auctions and Mechanism Design
2 Auctions I: Common auctions, revenue equivalence, and optimal mechanisms
3 Auctions II: Independent private values (IPV) and revenue equivalence

Auctions III: Interdependent values and linkage principle

Auctions IV: Multiunit auctions and Cremer-McLean mechanism

Static Models
5 Simple models: Hidden information, Spence's model, and hidden action
6 Moral hazard: Multiple agents
Dynamic Models
7 Dynamic adverse selection: DG monopoly with fixed types
8 Dynamic moral hazard
Surplus Division
9 Surplus division, fair distribution, the Shapley value, and Nash bargaining solution