I have posted the lecture note for this evening; see http://economics.garven.com/fall2009/lecture7.ppt for the PowerPoint version and http://economics.garven.com/fall2009/lecture7.pdf for the Acrobat version.
The game plan for this evening is to focus our attention on the following set of topics (mostly taken or further developed from pp. 444-457 of Chapter 13):
- Expected value model
- Expected utility model
- Risk preferences (risk aversion, risk neutrality, risk loving)
- Risk Analysis Class Problem
- The Demand for Insurance
I will post the solutions for the problem set sometime after class starts this evening. Although I do not plan to spend class time to go over these solutions, I will stick around after class is over in case if anyone has any specific questions concerning the problem set. Obviously , you may also avail yourself of the solutions and subsequently call or email me with your questions.