Introductory description

This module uses traditional economic tools, for example partial equilibrium analysis, to teach the students to identify profitable decisions. When a bad decision is made by a manager, we explore its possible sources, which can include: (1) The manager was the wrong person to take the decision. (2) The manager did not have enough information to make a good decision. (3) The manager had an incentive to take the wrong decision. The economic tools help the students to develop a view on the appropriate way to tackle these issues, which can be, for example, either to change the decision-maker, or to change the information flow, or to change the incentives in the business organisation.

Module web page

Module aims

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

1. Competitive Markets: (a) Review of Supply, Demand and Market Equilibrium. (b) Welfare Properties of Competitive Markets.

2. Market Structures: (a) Monopoly and Monopoly Pricing. (b) Oligopoly, Quantity Setting and Pricing Models, First Mover Advantage.

3. Game Theory: (a) Introduction to Game Theory, Nash Equilibrium. (b) Simultaneous and Sequential Games. (c) Classical Games and Applications.

4. Internal Organisation: (a) The Theory of the Firm, Transaction Costs, Make vs. Buy, Incomplete Contracts. (b) The Principal-Agent Problem, Incentive Contracts, Uncertainty and Risk-Aversion.

5. Asymmetric Information: (a) Moral Hazard with Applications to Finance. (b) Adverse Selection, The Lemons Problem, Herding.

Learning outcomes

By the end of the module, students should be able to:

• Subject knowledge and understanding:…understand key concepts in Managerial Economics, such as market structures, game theory, imperfect information, principal-agent problems.
• Subject knowledge and understanding:…demonstrate knowledge of economic trends, institutions and policies, especially in the context of business and industry-related problems and issues.
• Subject knowledge and understanding:…abstract and simplify basic economic problems through the application of simple theoretical models.
• Key Skills:…communicate knowledge and understanding of economics in written, spoken, graphical and in appropriate mathematical forms.
• Cognitive Skills:…analyse competing models and hypotheses in a critical way.
• Key Skills:…conduct individual research into an Economic topic, using world wide web and library resources.
• Cognitive Skills:…analyse and formulate models for understanding and solving problems.
• Subject-Specific/Professional Skills:…select and apply appropriate economic models and techniques to particular problems especially relating to business and industry.

Indicative reading list

Please see Talis Aspire link for most up to date list.

View reading list on Talis Aspire

Subject specific skills

Students will have the opportunity to develop skills in:
Analytical thinking and written communication
Analytical reasoning
Critical thinking
Strategic thinking
Problem-solving
Analysis of incentives
Analysis of optimisation
Understanding of Uncertainty and Incomplete Information

Transferable skills

Students will have the opportunity to develop:
Numeracy and quantitative skills
Written communication skills
Oral communication skills