Uncertainty, Risk, and Society

This course shows how economists incorporate uncertainty and risk into their understanding of how both the economy and our society function. The course begins by examining how economists define and measure risk and uncertainty, and moves to a discussion of how economists envision human beings' relationship with uncertainty and risk. Then the course turns to an examination of how uncertainty and risk increase the difficulty of making choices, both in market and non-market settings, and how uncertainty and risk cause problems for the economy and society in general, including several well known problems such as adverse selection and moral hazard. Then the course turns to the ways that human beings deal with uncertainty and risk, focusing on how the task of coping with uncertainty and risk has had deep and lasting effects on human practices and institutions. Offered only in the First Year Constellations program.