ECON
87: HOW TO TAKE RISKS
Fall 2009
Seminar days (Tues, Thur): Sept. 24, 29, Oct. 1, 6, 8, 13,
15, 20, 22, 27
Section A: 8:00-8:50am
Sequoyah 244
Section B: 9:00-9:50am
Professor
Mark Machina
Office: Economics Bldg. 217
Office Hours: Wed
8am-noon
This
seminar will disuss how one should formulate risky choices, make intelligent
decisions in the face of uncertainty,
and avoid common pitfalls. We will also compare and contrast the
economic and the psychological theories of risky choice.
List of Topics
I.
Introduction: How to Represent Uncertainty
II.
Simple Criteria for Choice under Objective Uncertainty
III.
Expected Utility Preferences over Objective Lotteries
IV.
Attitudes Toward Risk and the Shape of the Utility Function
V.
Comparative Risk Aversion
VI.
Increasing Risk
VII.
Risk Preferences and Beliefs under Subjective Uncertainty
VIII.
Demand for Insurance
IX.
Evidence on the Underlying Assumptions of the Model
X.
Alternative Models of Risk Preferences and Beliefs
READINGS AND
PRACTICE PROBLEMS: I will
distribute custom-designed handouts and practice problems throughout the
course.
EXAMS: The
course is Pass/No Pass. There will
be a Midterm and a Final Exam.
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