Micro Ch12.pptVIP

Chapter 12 Uncertainty 不确定性 What do we do in the chapter? We are still in Part 1 of the 3 parts of consumer choice problems; But we study the consumer choices over uncertain outcomes; We first work out the consumer’s new budget constraint; We then work out consumer preferences; We finally arrive at consumer’s optimal choice. Uncertainty is Pervasive What is uncertain in economic systems? tomorrow’s prices future wealth future availability of commodities present and future actions of other people. Uncertainty is Pervasive What are rational responses to uncertainty? buying insurance health,