Ch12 Uncertainty.pptVIP

Chapter Twelve Uncertainty Structure State contingent consumption 依情形而定的消费） State-contingent budget constraint Preferences under uncertainty Choice under uncertainty Risk aversion Diversification and risk spreading 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, life, auto a portfolio of contingent consumption goods. States of Nature Possible states of Nature: “car accident