Economics 397BB - ST-Econ of Risk & Uncertainty

The economics of risk and uncertainty examines how people, governments, and businesses make decisions, and how they should make decisions, when they are uncertain about the future and other aspects of their environment. We will examine different ways of being uncertain, distinguishing between situations when possible outcomes and their likelihoods are known situations when they are not. We will study the measurement of risk and attitudes toward risk. We will examine both the standard economic approaches and alternative approaches that incorporate psychological evidence about how people make decisions under risk and uncertainty. The theory will be applied to a variety of topics such as portfolio choice, insurance markets, bidding in auctions, voting, environmental decision-making, risks over time, and the value of information. Some background in probability or statistics is recommended but not required.

ECON 203 or RES-ECON 202 Open only to ECON/ STPEC/ RESEC PRIMARY majors until after juniors enroll, then open to all November 10.