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  • February 01, 2022
  • admin

Theory of Consumer Demand

19. Choice Under Risk and Uncertainty (Part 1) : Simple, Compound and Reduced form Lotteries ; Preferences over Risk (Independence Axiom and Continuity Axiom); Expected Utility Function (VNM Expected Utility Function)

Topics Discussed

  • Choice under risk and Uncertainty
  • St. Peters berg Paradox
  • Lotteries
  • Simple Lottery
  • Compound Lottery
  • Reduced Lottery
  • Preferences over Lotteries
  • Expected Utility Theory

20. Choice Under Risk and Uncertainty (Part 2) : Expected Utility function Unique (IES 2013); Risk Averse, Risk Loving, Risk Neutral; Arrow Pratt Measure of Risk Aversion; Demand for Insurance

Topics Discussed

  • Expected Utility Theory and Risk Aversion
  • Certainty Equivalent and Risk Premium
  • Arrow Pratt Measure of Risk Aversion
  • Relative Risk Aversion
  • How Absolute Risk Aversion Changes with Wealth
  • How Relative Risk Aversion Changes with Wealth
  • Risk Aversion and Insurance

Past Year Question Discussed

Q3, IES, 2013

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