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Unformatted text preview: Lender/borrower Present value A bond Inflation Uncertainty (Chapter 12) States of nature Contingent consumption plan Expected utility Risk averse/ risk neutral/ risk loving Certainly equivalent (see notes or problem set) Applications to: Insurance Investing in a risky asset Comment: We will cover Revealed Preferences very briefly. Chapter 7-7.4 contains relevant readings, but it is more comprehensive than we will cover in class. You may read your notes only if you prefer....
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- Spring '06