ECON 132 Study Guide - Midterm Guide: Risk Aversion, Market Failure, Risk Premium
Document Summary
The smaller the standard error, the more representative the sample will be of the overall population: sd tells us about the shape of our distribution, how close the individual data values are from the mean value. The student who rst encounters a regression table will see three things. The numbers inside parentheses next to a variable. The numbers not in parentheses next to a variable. Some of those numbers not in parentheses have some asterisks next to them. We will discuss these now, starting with the second item. Individuals value insurance to help with consumption smoothing across all possible states of the world views on risk factor into insurance decisions: Risk averse people make different decisions than those who are risk neutral/risk seeking. Yt - t t et t+1: information asymmetry leads to market failure information asymmetry: the difference in information available to sellers and purchasers in the market.
