ECON 395 - Topics in Microeconomics and Microeconomic Policy
Section: 001 Risk and Uncertainty
Term: FA 2018
Subject: Economics (ECON)
Department: LSA Economics
Waitlist Capacity:
Enforced Prerequisites:
ECON 101 (completed with a minimum grade of C or better).
Advisory Prerequisites:
ECON 102 (unless ECON 101 completed with B or higher).
May be repeated for a maximum of 6 credit(s). May be elected more than once in the same term.
Primary Instructor:

Idealized competitive markets may allocate resources efficiently, but imperfections in those markets will lead to misallocation of resources. Of particular interest in this course are the consequences of “imperfect information.” We consider models in which decision makers are uncertain about the consequences of their choices. Risk abounds and that risk influences the choices of decision makers, with the result that resources are often misallocated.

The first portion of the course develops models for decision-making under uncertainty. We will consider primarily the expected utility model, but also investigate some of the criticisms of expected utility theory, and potentially some alternative models of decision making under uncertainty.

The second portion of the course will look to apply the expected utility model in various economic scenarios. We will consider insurance markets, and develop an understanding of the problems of adverse selection and moral hazard. We will investigate the role of adverse selection in asset markets, and the potential for informational asymmetries to generate trade in financial assets, as well as the difficulties that adverse selection poses for regulation of monopoly. We will also consider the role that moral hazard plays in influencing the structure of contracts.

ECON 395 - Topics in Microeconomics and Microeconomic Policy
Schedule Listing
001 (LEC)
TuTh 11:30AM - 1:00PM
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