RMI 9030 - Risk Aversion, Risk Perception, and Risk Management

3 Credit Hours
Prerequisites: Prerequisite: Consent of RMI graduate advisor.
Description
This course examines the risk management decisions that agents make, as well as the normative question of how to evaluate those decisions from a policy perspective. The course reviews alternative theoretical models of risk preferences, and the behavioral evidence for and against them. It reviews alternative theoretical models of subjective risk perception, and the behavioral evidence for and against them. Particular attention is given to the distinction in economics and finance between atemporal risk preferences and intertemporal risk preferences, as well as the distinction between static risk perceptions and dynamic risk perceptions over time. These tools provide the basis for examining the various ways in which agents manage risks, again taking into account behavioral evidence. L