# Master AMSE, Aix-Marseille School of Economics # Master 1 (M1), Aix Marseille Sciences Économiques

## RESPONSABLE

## AIM

The Master’s provides training in economic analysis through modelling and econometrics. The first year (M1) covers the essential groundwork so that, in the second year (M2), students can choose to specialise in a particular field.

The general foundations are laid in M1, with the accent on economics methodology. Students also learn how to use software for econometrics and database management. A methodology module in the first semester of M1 provides the technical tools for the other courses.

M1 is largely organised around a common core, with the first semester fully common. This first semester is aimed at generating a solid common knowledge base for students who may come from a range of backgrounds. The second semester begins with a common core, but the latter part of this second semester prepares the students for the choice of direction they will have to make in M2. Without yet defining a specific track, students declare which specialisation they intend to follow in M2, and receive more targeted instruction.

Overall, M1 consists of basic courses preparing students for more targeted specialist research and professional studies.

* Note * : this programme is subject to change

## LINKS WITH RESEARCH

This Master’s is backed by the AMSE Labex (research excellence) which combines almost one hundred researchers from AMU, CNRS, INSERM, EHESS, IRD and ECM with the three economics research centres : Greqam (UMR 7316), Sesstim (UMR 912) and Institut d’économie publique.

## WEB SITE

## PLAQUETTE DE LA FORMATION

## PROFESSIONAL SKILLS

Students will gain a fundamental knowledge of the advanced theories of microeconomics and of macroeconomics. They will understand current economics issues. They will manipulate quantitative economics tools and apply their theoretical knowledge to carry out cross-disciplinary supervised projects. Overall, students will achieve an understanding of the economic trends that affect Finance, Insurance, Development and International Economics.

## INTERNSHIPS AND SUPERVISED PROJECTS

Students can do an internship at the end of M1, but this is not compulsory. During the second part of the M2 year, students either do an internship or write a Master’s thesis.

The internship can be carried out in a firm, in a public authority or in an institution whose activities are compatible with the student’s skills. The objective of the placement is to show an ability to apply the conceptual tools acquired during the Master’s to issues arising in the professional world. The student must therefore identify the issue, apply the tools and satisfactorily communicate the results to both professionals and academics. The internship is supervised by a university staff member and by an internship supervisor from the company or authority. The organisation suggests the topic, which the student summarises in one page, subject to university approval as an M2 internship topic. At the end of the internship, the student writes an internship report, which must be defended before a jury composed of two members of the Master’s teaching staff, one of whom must be the university internship supervisor, together with the in-house internship supervisor if possible.

Students intending to purse PhD studies can choose to write a Master’s thesis as an alternative to the internship. This can be done at one of the AMSE research centres (Greqam-UMR 7316, Sesstim-UMR 912 and IDEP-Institut d’économie publique). It will entail identifying an economics research question, exploring the relevant literature and making an original contribution to it.

## PLAQUETTE DE LA FORMATION

### Semester 1 (30 ECTS)

### Advanced microeconomics (6 ECTS)

## CONTENT

This course aims at acquainting the student with the analytical framework of classical microeconomics. Classical microeconomics describes the working of the economy as a whole under the assumption that all economic agents (households and firms) behave in a competitive setting in which all their interactions are summarized by a price system that they consider as given. This important model serves as a benchmark for almost all economic theories.

**Course overview** __a. Introduction__ a1 Object of microeconomic analysis ; a2 Notion of good, prices, and private ownership ; a3 Time, space, and uncertainty __b.The competitive firm__ b1 The neoclassical theory of the firm ; b2 The firm’s technology ; b3 The firm’s cost-minimization behaviour ; b4 The firm’s profit-maximization behaviour ; b5 Duality and comparative statics __c.The household in a certain environment__ c1 The household in a private ownership economy ; c2 The household’s preference ; c3 The household’s constraints ; c4 The household’s behaviour ; c5 Duality and comparative statics ; c6 Aggregation (across goods and across households) __d.The household in an uncertain environment__ d1 Risk, uncertainty and ignorance ; d2 The expected utility model and its alternative ; d3 Risk/uncertainty attitude and demand for insurance __e.Positive General equilibrium analysis__ e1 Formulation of the problem ; e2 Existence in an exchange economy ; e3 Existence in a production economy ; e4 Rhe Debreu-Mantel Sonnenchein theorem ; e5 Uniqueness and comparative statics __f. Normative General Equilibrium analysis__ f1 Some normative criteria : Pareto efficiency, envy-freeness, social welfare functions ; f2 The first welfare theorem ; f3 The second welfare theorem ; f4 Market failures : imperfect competition, public good, and externalities

## VOLUME OF TEACHINGS

- Lectures:
**48**hours

### Advanced macroeconomics (6 ECTS)

## CONTENT

The aim of the course is to present advanced macroeconomic topics related to the analysis of aggregate consumption and aggregate investment. The final part focuses on Real Business Cycle models, where the ability of these theories to explain observed business cycles is assessed.

**Chap. I : Consumption theory**

- Introduction : the Keynesian consumption function
- Consumption over the life cycle : the permanent income/life cycle models
- Introducing uncertainty – The random walk hypothesis
- Market imperfections : the role of liquidity constraints
- Extensions : risk aversion, precautionary savings

**Chap. 2 : Investment theory**

- Introduction
- The Neoclassical model of capital demand
- Investment with adjustment costs : Q-theory models
- Investment under uncertainty
- Investment under capital market imperfections

**Chap. 3 : Measuring business cycles**

- The measurement problem
- The Hodrick-Prescott filter
- Stylized facts of economic fluctuations

**Chap. 4 : The Real Business Cycle (RBC) model**

- Introduction
- The RBC model
- Evaluation of the model

## VOLUME OF TEACHINGS

- Lectures:
**48**hours

### Econometrics (6 ECTS)

## CONTENT

Provide students with the knowledge of the foundations of the econometrics of linear models. Make them capable of choosing and implementing the relevant estimation methods and statistical tests given the model and data characteristics.

__COURSE OVERVIEW__

1 – Introduction

2 – The linear model with exogenous regressors

3 – The general linear model with exogenous regressors

4 – The linear model with endogenous regressors

5 – Microeconometrics specific issues. An introduction.

6 – Time-series econometrics specific issues. An introduction.

## VOLUME OF TEACHINGS

- Lectures:
**48**hours

### Methodology (12 ECTS)

### Applied statistics and econometrics using SAS

## CONTENT

Make students able to :

- build a structured empirical analysis of any economic or social question.
- use SAS statistical and econometric procedures in a relevant way
- use their knowledge of econometric theory in order to interpret their empirical results.
- write and present their analysis and its main results in a professional way.

__COURSE OVERVIEW__

1 – Introduction. A simple example.

2 – Computing basic statistics with SAS

3 - A deeper insight into the SAS DATA step

4 - A deeper insight into SAS statistical procedures

5 - Producing graphs with SAS

6 – Doing basic econometrics using SAS

7 – Writing and running macro-instructions with SAS (if time allows)

### Optimisation, dynamic systems and control

## CONTENT

Review optimization theory with a geometric approach and then introduce in a second part the study of dynamical systems

__Course overview :__

Optimization

I. A geometric approach

II. Optimization with constraints taking the form of equations

III. Optimization with mixed constraints

IV. Saddle point and duality

Dynamical systems

I. Reminder : scalar differential equations, separated variables, linear equations

II. Systems of linear equations

III. Systems of nonlinear differential equations

### Game theory

## CONTENT

Faculty is Jernej Copic.

The objective of this course is to introduce the basic concepts and techniques of game theory.

__COURSE OVERVIEW__

The course is divided in four parts :

1. Foundations of game theory

- 1.A. What is a game ? Normal form, finite game, positive and normative analysis.
- 1.B. Classical examples. Coordination games, prisoner’s dilemma, rock-scissors-paper.
- 1.C. Normative analysis. Pareto and utilitarian optima.
- 1.D Positive analysis. Common knowledge, iterated elimination of strictly dominated strategies, Nash equilibrium, best-replies, the Braess paradox, threshold model of public good.

2. Mixed extension

- 2.A. Mixed extension. Mixed strategies, expected payoffs.
- 2.B. Mixed Nash equilibrium. Definition, existence, characterization.
- 2.C. Examples.
- 2.D. Zero-sum games. Minimax theorem. Relation to Nash equilibrium.

3. Games with continuous action

- 3.A. A typology of games. Positive and negative externalities. Strategic complements and substitutes.
- 3.B. Imperfect competition. Cournot and Bertrand competition.
- 3.C. Public goods provision. Homogeneous and unequal incomes. Uniqueness.

4. Dynamic games

- 4.A. Extensive form. Perfect and imperfect information.
- 4.B. Strategies and normal form. Nash equilibrium.
- 4.C. Subgame perfect equilibria and backwards induction. Win or lose games.

### Semester 2 (30 ECTS)

### Macroeconomic analysis (6 ECTS)

### Growth and fluctuations

## CONTENT

This course introduces the main models and tools used in the recent analysis of macro-dynamics, with applications to public intervention, inequalities and asset price valuation.

__Course overview :__

**Part 1 : The Ramsey model**

- Chapter 1 : The model with a representative agent : uniqueness, convergence and optimality
- Chapter 2 : The Ramsey model with many agents : Wealth distribution

**Part 2 : The overlapping generations’ model**

- Chapter 1 : The basic model
- Chapter 2 : Steady states and dynamics
- Chapter 3 : Optimality and efficiency
- Chapter 4 : Pension system, public spending and debt
- Chapter 5 : Existence of bubbles

### International macroeconomics

## CONTENT

The objective of this course is to present the issues related to the integration of economies. Starting with fiscal externalities, it addresses the issue of coordination of tax and public spending policies, then looks at public debt issues and sovereign debt crisis. It presents the current account as an optimal allocation of resources between countries, which allows to analyze the rise of global imbalances.

__Course overview__

Ch. I : Fiscal policy in open economy

Ch. II : Sovereign debt crisis

Ch. III : Intertemporal approach of the current account (capital flows, global imbalances, original sin, value effects)

### Econometrics (6 ECTS)

### Panel data econometrics

## CONTENT

The objective of this course is to present to the students an introduction to econometric methods enabling them to analyse data in which the observational units are followed over time.

__Course overview :__

- Reminders of Linear Static Econometrics
- Introduction to Panel Data
- Unobserved Heterogeneity
- Variance Components Models
- Dynamic Models

### Time series

## CONTENT

You will understand the theory behind models for time series data. These exhibit often rich dynamic structures, so data are dependent. Their analysis therefore requires techniques that are often different from cross-sectional settings. Theory is fully supported by extensive exercises and practical illustrations using the software R.

__Course overview :__

The course will focus on the analysis of a univariate time series.

The dynamics will be analysed by considering the autocorrelations of the series.

- We start with concepts of statistical regularities (weak and strong stationarity, asymptotic independence), then consider in detail the class of ARIMA models.
- Model estimation and model selection.
- Non-stationary models (deterministic and stochastic trends, structural breaks) ; unit roots.

### Microeconomic analysis (6 ECTS)

### Elective course, 2 courses among 3

### Economic philosophy

## CONTENT

The goals are to understand better some key ideas of economics ; to understand different methodologies within economics and to be able to have a critical view (which implies also positive criticism) of economics as a social science.

__Course overview :__

I will start this course by giving an introduction as well as selective overview over some topics in economics and philosophy. During the following sessions, I will discuss issues such as the conception of the homo economicus and its rationality, and in particular explore what kind of motives and reasons the economic agent has to act and to choose. This means that we will discuss in detail the idea of self-interest and other possible motives of action that may even compete with self-interest. Interesting in this respect is to look at the novel and challenging insights that experimental and behavioral economics has brought along. It may be argued that new experimental methods and psychological as well as neurological insights overhaul completely the standard representation of the homo economicus as a rational and/or self-interested being. Other concepts such as given and stable preferences may also not any longer seem to be tenable. We will evaluate these issues and see in how far those experimental results and theories of human decision making of other disciplines such as psychology may influence whom we think the economic agent is. We will also borrow ideas and concepts from other social sciences such as anthropology and sociology to learn more about rationality and the economic agent.

### Public economics I

## CONTENT

The objective of this course is to study the role of state in the economy. It is designed to provide students with a broad overview of issues investigated in public economics.

We will review the rational foundations of public intervention and explore some of the tools used by government to act : taxes and transfers, the provision of public goods, or the design of welfare schemes.

__Course overview :__

1 – Introduction and foundations of public intervention

2 – Social choice

3 – Public goods

4 – Externalities

5 –Taxation

### Economics of uncertainty

## CONTENT

The objective of this course is to present to the students an introduction to the methods of economic analysis under uncertainty.

__Course overview :__

- Models of Uncertainty
- Decision Criteria
- Risk trading and sharing, and insurance
- Financial Decisions

### Elective specialisation, choose 1 among 4 (12 ECTS)

### Macroeconomics / Development (12 ECTS)

### International trade

## CONTENT

The objective of the course is to form students able to analyse current issues in international trade in the light of economic theory.

__Course overview :__

The course deals with the consequences of trade liberalization on international specialization, on factors price and inequalities, on industrial agglomeration, on adjustments within industries, and on economic welfare. The course studies in depth the models used for the analysis of these issues. The course requires students to have analytical skills and to be able to understand elementary empirical analysis.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Labour economics

## CONTENT

The objective of this course is to provide students with the necessary tools to be able to analyze the consequences of various labor market institutions and active labor market policies on employment, unemployment and labor market participation.

__Course overview :__

In the three first chapters, we will propose various theoretical setups to analyze the impact of various types of taxes, a minimum wage and labor unions on the functioning of the labor market. The theories of discrimination under perfect and imperfect competition are analyzed in chapter 4. The theory of human capital, the role of education as a signaling device and the relationship between education and income are studied in chapter 5. The last chapter will introduce the modern theory of the labor market based on search and matching. This more modern theoretical setup will be studied in more detail in Master 2.

For every chapter, we will contrast theoretical predictions with empirical evidence.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Databases and softwares

## CONTENT

The primary aim of this course is to introduce students to data manipulation and to econometric models estimation using the Stata software.

__Course overview :__

After an introduction to Stata, empirical examples will be provided to illustrate the following econometric techniques :

- Linear regression models

- Instrumental Variable estimator

- Limited dependent variable models

- Panel data models

- Introduction to Time Series Models (using the PcGive module in Oxmetrics, if time permits)

### Project management

## CONTENT

This course aims at raising awareness in :

- the official development assistance (ODA) challenges
- the professional tools to build development field projects

__Course overview :__

Session 1 : Strategies of intervention in ODA – Key factors of success for development programs

Session 2 : Three must-know development tools : the PCM, the problem tree and the logical framework approach – First step of the PCM : programming and the stakeholders’ matrix

Session 3 : Presentation of the students’ programming process (mid course evaluation) – second step of the PCM : identification

Session 4 : role playing : from the focus group to the problem tree co construction

Session 5 : role playing : from the objective tree to the strategy of intervention

Session 6 : role playing : presentations of the students’ logical frameworks (final evaluation)

### Econometrics (12 ECTS)

### Choose 4 courses among 5

### Labour economics

## CONTENT

The objective of this course is to provide students with the necessary tools to be able to analyze the consequences of various labor market institutions and active labor market policies on employment, unemployment and labor market participation.

__Course overview :__

In the three first chapters, we will propose various theoretical setups to analyze the impact of various types of taxes, a minimum wage and labor unions on the functioning of the labor market. The theories of discrimination under perfect and imperfect competition are analyzed in chapter 4. The theory of human capital, the role of education as a signaling device and the relationship between education and income are studied in chapter 5. The last chapter will introduce the modern theory of the labor market based on search and matching. This more modern theoretical setup will be studied in more detail in Master 2.

For every chapter, we will contrast theoretical predictions with empirical evidence.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Databases and softwares

## CONTENT

The primary aim of this course is to introduce students to data manipulation and to econometric models estimation using the Stata software.

__Course overview :__

After an introduction to Stata, empirical examples will be provided to illustrate the following econometric techniques :

- Linear regression models

- Instrumental Variable estimator

- Limited dependent variable models

- Panel data models

- Introduction to Time Series Models (using the PcGive module in Oxmetrics, if time permits)

### Project management

## CONTENT

This course aims at raising awareness in :

- the official development assistance (ODA) challenges
- the professional tools to build development field projects

__Course overview :__

Session 1 : Strategies of intervention in ODA – Key factors of success for development programs

Session 2 : Three must-know development tools : the PCM, the problem tree and the logical framework approach – First step of the PCM : programming and the stakeholders’ matrix

Session 3 : Presentation of the students’ programming process (mid course evaluation) – second step of the PCM : identification

Session 4 : role playing : from the focus group to the problem tree co construction

Session 5 : role playing : from the objective tree to the strategy of intervention

Session 6 : role playing : presentations of the students’ logical frameworks (final evaluation)

### Public policies evaluation

## CONTENT

This lecture aims to provide the different tools for formal evaluations of « treatment effects », that is, the causal effect of a public policy or program on economic decisions (labor supply, consumption, savings, retirement, etc.) in developed or developing countries.

__Course overview :__

1. The evaluation problem and Rubin’s framework

2. Randomized Control Experiments

3. Selection bias

4. Instrumental Variables and LATE

5. Difference-in-difference and panel estimations

6. Regression discontinuity

7. CIA, Matching and PSM

8. The revolution of administrative data

### Statistical foundations of econometrics

## CONTENT

Given the importance that it takes the teachings of the various sub-disciplines oriented as 'quantitative methods' (theoretical econometrics, applied econometrics, financial econometrics etc.), and on the other hand the heterogeneity of the students in this master, this course wants to be a global revision of concepts introduced (maybe) in a basic way during the license (L2 L3). At the same time the thorough study of the various probabilistic and statistical techniques necessary to practice or understand these concepts in other subjects taught in the Master (M1 or M2).

__Course overview :__

1 Revision real univariate random variables. Probability distribution induced by a r.v. 2 Functions associated to a r.v. and their properties (density and distribution functions). 3 Main families of continuous and discrete r.v. used in statistics and econometrics. 4 Theoretical and empirical Moments. Statistical properties. Skewness. Kurtosis. 5 Moment generating function and his properties. Computation of theoretical moments for various families. 6 Types of convergence for sequences of r.v. (in probability, almost sure, in distribution). 6 Inequalities between moments and applications - Chebyshev' inequality and the Law of Large Numbers - Cauchy-Schwarz inequality and linear correlation coefficient. 7 Families closed to the sum. Levy theorem. Central Limit Theorem. 8 Gaussian approximation to various laws. 9 Method of moments to estimate the parameters of a r.v. 10 Method of maximum likelihood. Fisher information. Cramer-Rao theorem. 11 Point estimation and confidence interval. Hypothesis testing. 12 Delta Theorem in the parametric case. Applications. 13 Weak exogeneity, strong exogeneity. Misspecification. 14 Deduction of classical nonparametric estimators and their statistical properties : - Empirical distribution function - Parzen-Rosenblat estimator for the density - Nadaraya-Watson estimator for the regression. 15 Revision and solution of a previous exam.

### Public economics (12 ECTS)

### Choose 4 courses among 5

### Databases and softwares

## CONTENT

The primary aim of this course is to introduce students to data manipulation and to econometric models estimation using the Stata software.

__Course overview :__

After an introduction to Stata, empirical examples will be provided to illustrate the following econometric techniques :

- Linear regression models

- Instrumental Variable estimator

- Limited dependent variable models

- Panel data models

- Introduction to Time Series Models (using the PcGive module in Oxmetrics, if time permits)

### Project management

## CONTENT

This course aims at raising awareness in :

- the official development assistance (ODA) challenges
- the professional tools to build development field projects

__Course overview :__

Session 1 : Strategies of intervention in ODA – Key factors of success for development programs

Session 2 : Three must-know development tools : the PCM, the problem tree and the logical framework approach – First step of the PCM : programming and the stakeholders’ matrix

Session 3 : Presentation of the students’ programming process (mid course evaluation) – second step of the PCM : identification

Session 4 : role playing : from the focus group to the problem tree co construction

Session 5 : role playing : from the objective tree to the strategy of intervention

Session 6 : role playing : presentations of the students’ logical frameworks (final evaluation)

### Public policies evaluation

## CONTENT

This lecture aims to provide the different tools for formal evaluations of « treatment effects », that is, the causal effect of a public policy or program on economic decisions (labor supply, consumption, savings, retirement, etc.) in developed or developing countries.

__Course overview :__

1. The evaluation problem and Rubin’s framework

2. Randomized Control Experiments

3. Selection bias

4. Instrumental Variables and LATE

5. Difference-in-difference and panel estimations

6. Regression discontinuity

7. CIA, Matching and PSM

8. The revolution of administrative data

### Environment economics

## CONTENT

After having defined an environmental externality, this course introduces the main instruments that allow to correct them. Then, the link between growth and environment is studied through the existence of resources or pollution.

__Course overview :__

Part 1 : The theory environmental externalities

- Chapter 1 : Definition of environmental externalities
- Chapter 2 : The means to correct externalities

Part 2 : Environment : A break on growth ?

- Chapter 1 : Growth with exhaustible resources
- Chapter 2 : Growth with renewable resources
- Chapter 3 : Growth and pollution

### Health economics

## CONTENT

The course introduces to the main topics in health economics : healthcare demand and supply. It emphasizes the behaviors of agents in the light of the mains results of microeconomic and decision theory.

__Course overview :__

**Chapter I. Why health economics ?**

1 Bad/good motives

2 A relevant field of economics

3 A challenging perspective for economics

**Chapter II. Is health a luxury good ?**

1 Income and health and healthcare consumption

2 The more you pay the better your health ?

**Chapter III. The production of health**

1 The physician as a (perfect ?) agent

2 Fees and physician labor supply

**Chapter IV. The demand for health**

1 The consumer as health producer

2 The demand for health capital

3 The deterioration of health capital

4 Consumer choice and demand

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Finance (12 ECTS)

### Choose 4 courses among 5

### Databases and softwares

## CONTENT

__Course overview :__

- Linear regression models

- Instrumental Variable estimator

- Limited dependent variable models

- Panel data models

- Introduction to Time Series Models (using the PcGive module in Oxmetrics, if time permits)

### Project management

## CONTENT

This course aims at raising awareness in :

- the official development assistance (ODA) challenges
- the professional tools to build development field projects

__Course overview :__

Session 1 : Strategies of intervention in ODA – Key factors of success for development programs

Session 4 : role playing : from the focus group to the problem tree co construction

Session 5 : role playing : from the objective tree to the strategy of intervention

Session 6 : role playing : presentations of the students’ logical frameworks (final evaluation)

### Statistical foundations of econometrics

## CONTENT

Given the importance that it takes the teachings of the various sub-disciplines oriented as 'quantitative methods' (theoretical econometrics, applied econometrics, financial econometrics etc.), and on the other hand the heterogeneity of the students in this master, this course wants to be a global revision of concepts introduced (maybe) in a basic way during the license (L2 L3). At the same time the thorough study of the various probabilistic and statistical techniques necessary to practice or understand these concepts in other subjects taught in the Master (M1 or M2).

__Course overview :__

1 Revision real univariate random variables. Probability distribution induced by a r.v. 2 Functions associated to a r.v. and their properties (density and distribution functions). 3 Main families of continuous and discrete r.v. used in statistics and econometrics. 4 Theoretical and empirical Moments. Statistical properties. Skewness. Kurtosis. 5 Moment generating function and his properties. Computation of theoretical moments for various families. 6 Types of convergence for sequences of r.v. (in probability, almost sure, in distribution). 6 Inequalities between moments and applications - Chebyshev' inequality and the Law of Large Numbers - Cauchy-Schwarz inequality and linear correlation coefficient. 7 Families closed to the sum. Levy theorem. Central Limit Theorem. 8 Gaussian approximation to various laws. 9 Method of moments to estimate the parameters of a r.v. 10 Method of maximum likelihood. Fisher information. Cramer-Rao theorem. 11 Point estimation and confidence interval. Hypothesis testing. 12 Delta Theorem in the parametric case. Applications. 13 Weak exogeneity, strong exogeneity. Misspecification. 14 Deduction of classical nonparametric estimators and their statistical properties : - Empirical distribution function - Parzen-Rosenblat estimator for the density - Nadaraya-Watson estimator for the regression. 15 Revision and solution of a previous exam.

### Finance

## CONTENT

The main aim of the course is to provide the students with fundamentals in finance theory. The course is taught at an intermediate level as it does not require good prior knowledge in risk theory or financial markets. Basics in financial products and discounting theory may help to understand the course and are therefore required. The course is self-contained as the students do not need to go through bibliographical references or textbooks to understand the taught materials. Nevertheless, a reading list is provided below to allow the students to improve their knowledge and their understanding of the different chapters seen during classes. The course is divided in 6 chapters with most of them dedicated to market finance. The last chapter is an introduction to corporate finance and its most important topic, namely the capital structure of the firm.

__Course overview :__

**1 Risk theory**

1.1 Risk aversion, risk premium in an EU framework

1.2 Portfolio choice in an EU framework

**2 Portfolio choice theory**

2.1 A two risky assets example

2.2 The general formulation for *n* risky assets

2.3 Introduction of a riskless asset

2.4 M-V analysis

**3 Equilibrium models : CAPM and APT**

3.1 Arbitrage pricing

3.2 CAPM

3.3 APT

**4 Equilibrium portfolio choices**

4.1 Managing with CAPM and APT

4.2 Portfolio performance measure

**5 Market efficiency and behavioural finance**

5.1 Market efficiency

5.2 Behavioural biases in financial decision making

**6 Topics in corporate finance : on the capital structure of the firm**

6.1 Debt and the firm value

6.2 CAPM and Corporate Finance

6.3 Payout policy

### Information asymnetries in economics and finance

## CONTENT

This course develops the modern theory of market failures due to information asymmetries. Specifically it focuses on models related to finance.

__Course overview :__

Chapter 1. Reminders : two theorems of normative economics

- Competitive equilibrium and efficiency in an exchange economy

- The role of information

Chapter 2. Asymmetry of information, introduction

- Adverse selection and moral hazard

- Simple examples

Chapter 3. Adverse Selection

- General model and the principle of revelation

- A model of delegation

- Variations : timing , outside Options

Chapter 4. Principal informed - Signalling

Chapter 5. Applications and Examples in finance

- Bid ask spread

- Credit Rationing

- Insurance

Chapter 6. Moral hazard

- The problem : examples

- The task delegation model

- Trade off incentive / risk sharing-

- Variations : The continuous case

Chapter 7. Applications and Examples in finance

- Insurance

- Project financing

Chapter 8. Extensions

- Repeated Relations

- Commitment