Uncertainty, Risk and Information: An Economic Analysis

✍ Scribed by Giacomo Bonnano

• Publisher: Independently Published
• Year: 2019
• Tongue: English
• Leaves: 417
• Edition: 1
• Category: Library

✦ Synopsis

Excellent book by Giacomo Bonanno on Uncertainty, Risk and Information. Recommended book for all those interested in insurance, contracts, incentives, information asymmetry (adverse selection, moral hazard, signaling, agency theory). Didactic book, very well written, rigorous and with solved exercises.

Excelente livro de Giacomo Bonanno sobre Incerteza, Risco e informação. Livro recomendado para todos aqueles interessados no tema de seguros, contratos, incentivos, assimetria de informação (seleção adversa, moral hazard, sinalização, teoria da agência). Livro didático, muito bem escrito, rigoroso e com exercícios resolvidos.

✦ Table of Contents

Front cover
Preface
Contents
1 Introduction
Part I — Insurance
2 Insurance: basic notions
2.1 Uncertainty and lotteries
2.2 Money lotteries and attitudes to risk
2.3 Certainty equivalent and the risk premium
2.4 Insurance: basic concepts
2.5 Isoprofit lines
2.6 Profitable insurance requires risk aversion
2.7 Exercises
2.8 Solutions to Exercises
3 Expected Utility Theory
3.1 Expected utility: theorems
3.2 Expected utility: the axioms
3.3 Exercises
3.4 Solutions to Exercises
4 Money lotteries revisited
4.1 von Neumann Morgenstern preferences over money lotteries
4.2 Measures of risk aversion
4.3 Some noteworthy utility functions
4.4 Higher risk
4.5 Exercises
4.6 Solutions to Exercises
5 Insurance: Part 2
5.1 Binary lotteries and indifference curves
5.2 Back to insurance
5.3 Choosing from a menu of contracts
5.4 Mutual insurance
5.5 Exercises
5.6 Solutions to Exercises
Part II — Risk Sharing
6 Risk Sharing and Efficiency
6.1 Sharing an uncertain surplus
6.2 The Edgeworth box
6.3 Points of tangency
6.4 Pareto efficient contracts on the sides of the Edgeworth box
6.5 The Edgeworth box when the parties have positive initial wealth
6.6 More than two outcomes
6.7 Exercises
6.8 Solutions to Exercises
Part III — Asymmetric Information: Adverse Selection
7 Adverse Selection
7.1 Adverse selection or hidden type
7.2 Conditional probability and belief updating
7.3 The market for used cars
7.4 Exercises
7.5 Solutions to Exercises
8 Adverse Selection in Insurance
8.1 Adverse selection in insurance markets
8.2 Two types of customers
8.3 The monopolist under asymmetric information
8.4 A perfectly competitive insurance industry
8.5 Exercises
8.6 Solutions to Exercises
Part IV — Asymmetric Information: Signaling
9 Signaling
9.1 Earnings and education
9.2 Signaling in the job market
9.3 Indices versus signals
9.4 More than two types
9.5 A more general analysis
9.6 Signaling in other markets
9.7 Exercises
9.8 Solutions to Exercises
Part V — Moral Hazard
10 Moral Hazard in Insurance
10.1 Moral hazard or hidden action
10.2 Moral hazard and insurance
10.3 Exercises
10.4 Solutions to Exercises
11 Moral Hazard in Principal-Agent
11.1 Moral hazard in Principal-Agent relationships
11.2 Risk sharing under moral hazard
11.3 The case with two outcomes and two levels of effort
11.4 The case with more than two outcomes
11.5 Exercises
11.6 Solutions to Exercises
12 Glossary
Index
Back cover