Topics Covered on Wednesday 11/20
Here is a brief synopsis of the topics covered in class that day. The first two bullets were applications of material introduced in previous classes. The third bullet was new material.
- Showed that the expected value of an uncertain situation is the same as the actuarially-fair premium that would be charged by an insurance company for a policy protecting against the risk.
- Discussed brownfields as a public policy problem and worked through an example from the perspectives of a potential developer, the city, and an insurance company.
- Discussed risk aversion and introduced expected utility as a way of representing it. Under the expected utility approach, decision makers care about the utility of an outcome, not its dollar value. They then choose actions which provide the largest expected utility rather than the largest expected value.
Site Index |
Zoom |
Admin
URL: https://wilcoxen.maxwell.insightworks.com/pages/4929.html
Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 08/22/2020