Module 1, Part 1: Risk and Uncertainty
Part 1 of Module 1 is all about risk and uncertainty. We will eventually use these concepts to study insurance markets and premiums.
Objectives
- Calculate expected values and expected utility
- Define a risk pool
- Define risk aversion and diminishing marginal utility
Activities
- Supplemental questions about insurance in the U.S., available here
- Discussion of Humana and importance of risk pools on the Module 1: Overview page
- In-class example on expected values
- In-class problem on expected costs, expected utilities, and risk aversion. The worksheet is here.
Slides
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