The Economics of Information

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An information good – such as for instance a book or a software – significantly differs from a usual good, in the sense that it has a very high fixed cost for producing the first copy and a negligible marginal cost for producing every additional copy. Thus, the tools of the standard microeconomic analysis are often not sufficient for understanding the markets of such goods. The aim of the course is to study markets of information goods, using game-theoretic models. In practice, we will first focus on developing some analytical skills by reviewing standard game-theoretic tools, such as Nash equilibrium, iterated elimination of strictly dominated strategies and backward induction. Then, we will use these tools to model and analyze topics from the theory of information goods, such as for instance versioning, bundling or lock-in. The suggested – though not necessary – requirement for the course is to have a solid background in microeconomics and mathematics at the level of the first-year courses offered by our school. Though the course is demanding, it is structured in such a way that a student can be successful by regularly attending the lectures and the tutorials. A rough estimate of the minimum self-study time needed to pass the course is about 12 to 16 hours a week.