This new text book by Urs Birchler and Monika Butler is an introduction to the study of how information affects economic relations. The authors provide a narrative treatment of the more formal concepts of Information Economics, using easy to understand and lively illustrations from film and literature and nutshell examples.
The book first covers the economics of information in a 'man versus nature' context, explaining basic concepts like rational updating or the value of information. Then in a 'man versus man' setting, Birchler and Butler describe strategic issues in the use of information: the make-buy-or-copy decision, the working and failure of markets and the important role of outguessing each other in a macroeconomic context. It closes with a 'man versus himself' perspective, focusing on information management within the individual.
This book also comes with a supporting website (www.alicebob.info), maintained by the authors.
Table of Contents
1. Why study information economics?, 2. How to read this book? Part one: Information as an economic good, 3. What is information?, 4. The value of information, 5. The optimal amount of information, 6. The production of information, Part two: How the market aggregates information, 7. From information to prices, 8. Knowing facts or reading thoughts, 9. Coordination problems, 10. Learning and cascades, 11. The macroeconomics of information,Part three: The economics of information asymmetries, 12. The winner's curse, 13. Hidden information and self-selection, 14. Optimal contracts, 15. The revelation principle, 16. Creating incentives, Part four: The economics of self-knowledge, 17. Me versus myself
Urs Birchler is Director at the Swiss National Bank and a former member of the Basel Committee on Banking Supervision. He has taught at the universities of Zurich, Berne, St. Gallen and Leipzig.
Monika Butler is Professor of Economics and Public Policy at the University of St. Gallen, CESifo Fellow and CEPR affiliate.
"If you teach advanced undergraduate microeconomics, you should be interested in this book. Birchler and Buetler have served up something genuinely novel and substantive here." - Matthew Ryan, New Zealand Economic Papers