(1) Get familiar with the microeconomic theory of uncertainty and information, its conclusions, limitations, and main applications;
(2) Acquire a working knowledge of techniques to analyze problems of choice under uncertainty and of asymmetric information.

This course, which falls under the area of mathematical economics and belongs to the Bachelor program Econometrics and Operations Research, gives an introduction to the microeconomic theory of uncertainty and information. In the course, we study basic elements of the role that information plays in the decisions of individuals and firms, as well as in the working of markets. This is done by combining elementary methods of microeconomics with those from elementary probability theory. First, we introduce expected utility maximization, the standard model of choice under uncertainty. We then use this model to study numerous important issues arising from incomplete information, such as attitudes toward risk, demand for insurance, portfolio selection, value of information, (in)efficiency of markets, moral hazard, and adverse selection.

Bikhchandani, S., J. Hirshleifer, and J.G. Riley (2013), The Analytics of Uncertainty and Information, 2nd edition, Cambridge University Press, Cambridge.

This course has been cancelled for the:
* pre-master Economics
* pre-master Human Decision Science
See the Bachelor Education and Examination Regulations for more information.

The following rule applies to pre-master students who started the programme prior to academic year 2023-2024.
Specifically:
* Pre-master Economics
* Pre-master Human Decision Science
TRANSITIONAL REGULATION (EBC2108):
Students who have not been able to successfully complete "Economics of Uncertainty and Information" (EBC2108) before 2024-2025, do not comply with the requirement to successfully complete the pre-master in two academic years. Therefore, no additional examination options will be available.


This course is in transition for the bachelor Fiscal Economics.
See the Bachelor Education and Examination Regulations for more information.

The following rule applies to bachelor Fiscal Economics students.
TRANSITIONAL REGULATION (EBC2108):
The bachelor Fiscal Economics has been discontinued.

There will be repeat education for year 1 and year 2 courses up to and including academic year 2025-2026 and exam-only up to and including academic year 2026-2027. For year 3 courses there will be repeat education up to and including 2026-2027 and exam-only up to and including academic year 2027-2028.

Whether a course is in transition, cancelled, or replaced may depend on the cohort you are in. Sometimes there are additional criteria. It is therefore very important to carefully read the EER and any addendum so you can apply the rules to your individual situation.


PREREQUISITES:
* Prior knowledge in microeconomics equivalent to the course "Microeconomics" (EBC1012) is essential.
* Recommended are also the courses "Probability Theory" (EBC1024), "Analysis II" (EBC1032), "Optimisation" (EBC2105), and "Game Theory and Economics" (EBC2110).
* Exchange and elective students should be aware of the advanced mathematical level of this course.