ECO204Y1 Lecture Notes - Lecture 5: Isoelastic Utility, Discrete Uniform Distribution, Steven Landsburg
Document Summary
Key terms: make sure you know definition, example, context and purpose for each of the following: risk-return preferences, expected utility maximization, von neumann-morgenstern utility index, risk aversion. Insurance premium: reducing risk and uncertainty exposure. Information: constant risk aversion, constant relative risk aversion. Alternative resources: mit ocw scholar 14. 01sc, jonathan gruber, fall 2010, lecture 20. Others are challenging and open-ended and give you opportunity to think deeply and creatively. Often, problems require additional assumptions that are not explicitly stated. Learning to make additional assumptions is a large part of learning to do economics. In some cases there will be more than one correct answer, depending on what assumptions you made. Thus, in answering problems you should always spell out your reasoning very carefully. This is particularly important in true or false problems, where the quality of your explanations will usually matter far more than your conclusion. To solidify your understanding: 1, 3, 4, 5a, 5c.
