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Department of Computer Science and Technology


Course pages 2020–21

Economics, Law and Ethics

Principal lecturer: Dr Alice Hutchings
Taken by: Part IB CST 75%, Part II CST 50%
Hours: 8
Suggested hours of supervisions: 2
This course is a prerequisite for: Business Studies, Cybercrime, E-Commerce
Past exam questions


This course aims to give students an introduction to some basic concepts in economics, law and ethics.


  • Classical economics and consumer theory. Prices and markets; Pareto efficiency; preferences; utility; supply and demand; the marginalist revolution; elasticity; the welfare theorems; transaction costs.
  • Information economics. The discriminating monopolist; marginal costs; effects of technology on supply and demand; competition and information; lock in; real and virtual networks; Metcalfe’s law; the dominant firm model; price discrimination; bundling; income distribution.
  • Market failure and behavioural economics. Market failure: the business cycle; recession and technology; tragedy of the commons; externalities; monopoly rents; asymmetric information: the market for lemons; adverse selection; moral hazard; signalling. Behavioural economics: bounded rationality, heuristics and biases; nudge theory; the power of defaults; agency effects.
  • Auction theory and game theory. Auction theory: types of auctions; strategic equivalence; the revenue equivalence theorem; the winner’s curse; problems with real auctions; mechanism design and the combinatorial auction; applicability of auction mechanisms in computer science; advertising auctions. Game theory: the choice between cooperation and conflict; strategic forms; dominant strategy equilibrium; Nash equilibrium; the prisoners’ dilemma; evolution of strategies; stag hunt; volunteer’s dilemma; chicken; iterated games; hawk-dove; application to computer science.
  • Principles of law. Criminal and civil law; contract law; choice of law and jurisdiction; arbitration; tort; negligence; defamation; intellectual property rights.
  • Law and the Internet. Computer evidence; the General Data Protection Regulation; UK laws that specifically affect the Internet; e-commerce regulations; privacy and electronic communications.
  • Philosophies of ethics. Authority, intuitionist, egoist and deontological theories; utilitarian and Rawlsian models; morality; insights from evolutionary psychology, neurology, and experimental ethics; professional codes of ethics; research ethics.
  • Contemporary ethical issues. The Internet and social policy; current debates on privacy, surveillance, and censorship; responsible vulnerability disclosure; algorithmic bias; predictive policing; gamification and engagement; targeted political advertising; environmental impacts.


At the end of the course students should have a basic appreciation of economic and legal terminology and arguments. They should understand some of the applications of economic models to systems engineering and their interest to theoretical computer science. They should also understand the main constraints that markets, legislation and ethics place on firms dealing in information goods and services.

Recommended reading

* Shapiro, C. & Varian, H. (1998). Information rules. Harvard Business School Press.
Varian, H. (1999). Intermediate microeconomics - a modern approach. Norton.

Further reading:

Smith, A. (1776). An inquiry into the nature and causes of the wealth of nations, available at
Thaler, R.H. (2016). Misbehaving. Penguin.
Galbraith, J.K. (1991). A history of economics. Penguin.
Poundstone, W. (1992). Prisoner’s dilemma. Anchor Books.
Pinker, S (2011). The Better Angels of our Nature. Penguin.
Anderson, R. (2008). Security engineering (Chapter 7). Wiley.
Nuffield Council on Bioethics (2015) The collection, linking and use of data in biomedical research and health care.