class 8 uncertainty 2 post

class 8 uncertainty 2 post - Class 8 Choice under...

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Class 8 Choice under Uncertainty
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What we did last time onsumer Surplus ± Consumer Surplus ± Preferences over “bets”
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Outline references over Bets ± Preferences over Bets ± Avoiding Risk ± Diversification ± Insurance ± Application: How much Health Insurance? ± Midterm
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Outline references over Bets ± Preferences over Bets ± Avoiding Risk ± Diversification ± Insurance ± Application: How much Health Insurance? ± Midterm
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“Bets” $ If Donkey wins 4 3 2 1 $ If Tiger wins 4 2 -1 1 3 Bundle (x,y) : Get $x if Tiger wins, get $y if Donkey wins
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Preferences Risk-Averse Risk-Loving Risk-Neutral 3 2 3 2 3 2 1 1 1 ertainty quivalent of Bet A: isk remi m 2 1 3 2 1 3 2 1 3 Certainty-Equivalent of Bet A: Payment x s.t. ( x,x ) ~ A Risk-Premium: Difference EV - CE
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Risk Aversion w
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Risk Aversion w
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Risk-Neutral w
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Risk-Loving w
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references over Bets ± Preferences over Bets ± Avoiding Risk ± Diversification ± Insurance ± Application: How much Health Insurance? ± Midterm
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class 8 uncertainty 2 post - Class 8 Choice under...

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