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| Preface | |
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| Decision Theory | |
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| Risk Aversion | |
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| An Historical Perspective on Risk Aversion | |
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| Definition and Characterization of Risk Aversion | |
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| Risk Premium and Certainty Equivalent | |
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| Degree of Risk Aversion | |
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| Decreasing Absolute Risk Aversion and Prudence | |
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| Relative Risk Aversion | |
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| Some Classical Utility Functions | |
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| Bibliographical References, Extensions and Exercises | |
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| The Measures of Risk | |
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| Increases in Risk | |
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| Aversion to Downside Risk | |
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| First-Degree Stochastic Dominance | |
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| Bibliographical References, Extensions and Exercises | |
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| Risk Management | |
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| Insurance Decisions | |
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| Optimal Insurance: an Illustration | |
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| Optimal Coinsurance | |
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| Comparative Statics in the Coinsurance Problem | |
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| The Optimality of Deductible Insurance | |
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| Bibliographical References, Extensions and Exercises | |
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| Static Portfolio Choices | |
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| The One-Risky-One-Riskfree-Asset Model | |
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| The Effect of Background Risk | |
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| Portfolios of Risky Assets | |
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| Bibliographical References, Extensions and Exercises | |
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| Static Portfolio Choices in an Arrow-Debreu Economy | |
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| Arrow-Debreu Securities and Arbitrage Pricing | |
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| Optimal Portfolios of Arrow-Debreu Securities | |
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| A Simple Graphical Illustration | |
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| Bibliographical References, Extensions and Exercises | |
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| Consumption and Saving | |
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| Consumption and Saving under Certainty | |
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| Uncertainty and Precautionary Savings | |
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| Risky Savings and Precautionary Demand | |
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| Time Consistency | |
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| Bibliographical References, Extensions and Exercises | |
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| Dynamic Portfolio Management | |
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| Backward Induction | |
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| The Dynamic Investment Problem | |
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| Time Diversification | |
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| Portfolio Management with Predictable Returns | |
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| Learning about the Distribution of Excess Returns | |
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| Bibliographical References, Extensions and Exercises | |
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| Risk and Information | |
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| The Value of Information | |
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| Comparative Statics Analysis | |
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| The Hirshleifer Effect | |
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| Bibliographical References, Extensions and Exercises | |
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| Optimal Prevention | |
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| Prevention under Risk Neutrality | |
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| Risk Aversion and Optimal Prevention | |
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| Prudence and Optimal Prevention | |
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| Bibliographical References, Extensions and Exercises | |
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| Risk Sharing | |
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| Efficient Allocations of Risks | |
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| Risk Sharing: an Illustration | |
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| Description of the Economy and Definition | |
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| Characterization of Efficient Allocations of Risk | |
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| Aggregation of Preferences | |
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| Bibliographical References, Extensions and Exercises | |
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| Asset Pricing | |
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| Competitive Markets for Arrow-Debreu Securities | |
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| The First Theorem of Welfare Economics | |
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| The Equity Premium | |
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| The Capital Asset-Pricing Model | |
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| Two-Fund Separation Theorem | |
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| Bond Pricing | |
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| Bibliographical References, Extensions and Exercises | |
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| Extensions | |
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| Asymmetric Information | |
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| Adverse Selection | |
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| Moral Hazard | |
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| The Principal-Agent Problem | |
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| Bibliographical References, Extensions and Exercises | |
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| Alternative Decision Criteria | |
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| The Independence Axiom and the Allais Paradox | |
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| Rank-Dependent EU | |
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| Ambiguity Aversion | |
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| Prospect Theory and Loss Aversion | |
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| Some Concluding Thoughts | |
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| Bibliographical References, Extensions and Exercises | |
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| Index | |