1. Markets. General Equilibrium. Basic Assumptions. Efficiency Properties and Welfare. Uncertainty and Time. Welfare under uncertainty: Optimal risk sharing. Market failures: Externalities and Public Goods. The Coase Theorem. Market incompleteness.
2. Transaction costs. The firm according to Coase. Definition and sources of transaction costs. Incompleteness of contracts. Bounded rationality. Asset specificity. Vertical integration.
3. Asymmetric information: imperfectly observable actions. Insurance and moral hazard. Moral hazard in firms: employee and managerial behavior. Incentive contracts and the principal and agent problem. Incentive mechanisms in organizations.
4. Asymmetric information: imperfectly observable characteristics. Private information. Insurance markets and adverse selection. Regulation and private information. Signaling. Screening mechanisms.
5. Incentives and human resources management. Selection. Internal labor markets. Incentive payment. Performance evaluation. Job design. Incentive pay for teams and team production.
6. Corporate governance. Separation of property and control. Interest conflicts in corporations. Financial structure and incentives. Signaling and finalcial decisions. Corporate control. Equity pay.
7. Modern organizational trends. History of organizational forms. Vertical boundaries of the firm. Strategic alliances and networks. Information technologies and the modern firm. Innovation and organization.
Along the course we will regularly have (multiple choice) tests that will refer to the material recently covered in class. At the end of the course, we will compute the average of the results of those tests (excepting that test in which each student has performed worse, which will be ignored). The average of the tests will account for 80% of the course grade, and the remaining 20% will correspond to the grade obtained for in-class presentations.
Those students who have not obtained the minimum grade, or those wishing to improve their grade, may also take a final exam. The final grade will be the maximum between the above mentioned course grade and the result of the final exam.
For those who take the make-up exam, the grade will correspond entirely to the result of that exam.