Handbook of the Economics of Risk and Uncertainty

The need to understand the theories and applications of economic and finance risk has been clear to everyone since the financial crisis, and this collection of original essays proffers broad, high-level explanations of risk and uncertainty. The economics of risk and uncertainty is unlike most branches of economics in spanning from the individual decision-maker to the market (and indeed, social decisions), and ranging from purely theoretical analysis through individual experimentation, empirical analysis, and applied and policy decisions. It also has close and sometimes conflicting relationships with theoretical and applied statistics, and psychology. The aim of this volume is to provide an overview of diverse aspects of this field, ranging from classical and foundational work through current developments.

Presents coherent summaries of risk and uncertainty that inform major areas in economics and financeDivides coverage between theoretical, empirical, and experimental findingsMakes the economics of risk and uncertainty accessible to scholars in fields outside economics

Section I: Individual Choice under Risk and Uncertainty: Foundations and Measurement

1. Axiomatic Foundations of Expected Utility and Subjective Probability - Edi Karni

2. Rationality and Dynamic Consistency under Risk and Uncertainty – Peter J. Hammond and Horst Zank

3. The Theory of Risk and Risk Aversion – Jack Meyer

4. Assessment and Estimation of Risk Preferences - Charles A. Holt and Susan K. Laury

Section II: Risk and Uncertainty: Markets and Public Policy

5. Insurance and Insurance Markets - Georges Dionne and Scott Harrington

6. Uncertainty and Imperfect Information in Markets - Benjamin E. Hermalin

7. The Value of Individual and Societal Risks to Life and Health – W. Kip Viscusi

8. Economic Analysis of Risk and Uncertainty Induced by Health Shocks: A Review and Extension – Tomas J. Philipson and George Zanjani

9. Regulating Occupational and Product Risks – Thomas J. Kneisner and John D. Leeth

10. Environmental Risk and Uncertainty – Joseph E. Aldy and W. Kip Viscusi

11. Economics of Natural Catastrophic Risk Insurance – Howard Kunreuther and Erwann Michel-Kerjan

Section III: Challenges and Responses to the Classical Model of Risk Preferences and Beliefs

12. Non-Expected Utility Models under Objective Uncertainty – John Quiggin

13.Ambiguity and Ambiguity Aversion – Mark J. Machina and Marciano Siniscalchi

14.Choice Under Uncertainty: Empirical Methods and Experimental Results – John D. Hey