Curriculum Information, Uncertainty & Signals
Information, Uncertainty & Signals
What happens when buyers, sellers, employers and workers know different things - lemons, screening, search costs, risk and the hidden economics of information.
- Why Information Is an Economic Good How the knowledge people have - or lack - shapes prices, trades and decisions, and why economists came to treat information as central. 📄 Read-aloud
- The Market for Lemons George Akerlof's famous explanation of how hidden quality can drive good products out of a market, using used cars as the example. 📄 Read-aloud
- Screening: How the Uninformed Side Finds Out How insurers, lenders and employers design choices and tests that lead people to reveal hidden information about themselves. 📄 Read-aloud
- The Principal-Agent Problem What happens when one person acts on behalf of another whose interests differ, and how contracts, incentives and monitoring try to align them. 📄 Read-aloud
- Search Costs: Why the Same Thing Has Different Prices Why identical products often sell at different prices, how the cost of searching explains it, and what the internet changed. 📄 Read-aloud
- Certification, Labels and Ratings How third parties such as inspectors, standards bodies and rating agencies provide information buyers cannot easily get themselves, and when they fail. 📄 Read-aloud
- Information, Uncertainty & Signals: Checkpoint 1 Quick checkpoint - five questions on asymmetric information, lemons, screening, principal-agent problems and search costs. 5 questions
- Risk vs Uncertainty Frank Knight's distinction between risks that can be measured and uncertainty that cannot, and why it matters for insurance, business and policy. 📄 Read-aloud
- Expected Value and Risk Aversion How to calculate the average outcome of a gamble, why most people prefer a sure thing anyway, and how that explains insurance and diversification. 📄 Read-aloud
- How Prices Carry Information Friedrich Hayek's insight that market prices pass on knowledge spread across millions of people, and why this matters for how economies coordinate. 📄 Read-aloud
- What Markets Know: Prediction Markets How markets where people bet on future events can combine scattered information into forecasts, and where they fall short. 📄 Read-aloud
- Mandatory Disclosure: Does Fine Print Help? Why governments require businesses to disclose information, from nutrition labels to loan terms, and what evidence shows about when disclosure works. 📄 Read-aloud
- Is It Worth Finding Out? The Value of Information How to judge whether gathering more information is worth its cost, and why choosing not to know everything can be rational. 📄 Read-aloud
- Information Cascades How people rationally follow others' choices and ignore their own information, why this can make crowds wrong, and how cascades can suddenly reverse. 📄 Read-aloud
- When Expensive Means "Good": Price as a Signal of Quality Why people often judge quality by price when they can't assess it directly, what experiments with wine and pills found, and how sellers use this. 📄 Read-aloud