Decision Under Risk and Time

3 units

This course covers topics on individual decision making, subject to risk and to inter-temporal considerations. The emphasis is on economic modeling, which combines both theory and reality. The course will begin by establishing a framework for analyzing preferences about risky outcomes. This framework will be applied to practical problems such as portfolio choice, asset pricing and insurance. The remainder of the course will consider decision-making in the long run, with focuses on the life-cycle consumption-versus-saving decision, the problem of time inconsistency and other real-world implications.