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Risk and Insurance Economics
Last Updated: 2026-02-05 16:16:36
Abstract
The course covers the economics of risk and insurance, in particular the following topics will be discussed:2) individual decision making under risk3) models of insurance demand, risk sharing, insurance supply4) information issues in insurance markets5) advanced topics in microeconomics and behavioral economics5) the macroeconomic role of insurers and insurance regulation
Objective
The course introduces students to basic microeconomic models of risk attitudes and highlight the role insurance can – or cannot – play for individuals facing risks.
Content
Everyday, we take decisions involving risks. These decisions are driven by our perception of and our appetite for risk. Insurance plays a significant role in people's risk-management strategies. In the first part of this lecture, we discuss a normative decision concept, Expected Utility theory, and compare it with empirically observed behaviour. Students then learn about the rationale for individuals to purchase insurance, and for companies to offer it. We derive the optimal level of insurance demand and discuss how it depends on our model's underlying assumptions. We then discuss the consequences of information asymmetries in insurance markets and the consequences for insurance supply. Finally, we discuss refinements in decision theory that help account for observed behaviours that don't fit with the basic models of microeconomic theory. For example, we'll explore how behavioural economics can be leveraged by the insurance industry.
Resources
Literature
Main literature: - Zweifel, P., & Eisen, R. (2012). Insurance Economics. Springer. - Handbook of the Economics of Risk and Uncertainty, Volume1; Further readings: - Dionne, G. (Ed.). (2013). Handbook of Insurance (2nd ed.). Springer. References will be given on a topic-by-topic basis during the course.
General Information
- Language
- English
- Levels
- BSC , MSC , DR , NDS
- Frequency
- Yearly recurring
Examination
- Type
- graded semester performance
Course Components
| Type | Title | Time & Place | Hours |
|---|---|---|---|
| lecture with exercise | Risk and Insurance Economics |
|
2 h weekly |
Offered In
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Actuary SAA Education at ETH Zurich (Further pieces of information are available at Prof. M. Wüthrich's secretariat, HG F 42.)
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Management, Technology and Economics (Focus Coordinators: Prof. Bart Clarysse D-MTEC and Swantje Pless D-MTEC)
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Management, Technology and Economics Master (Welcome and Introduction to MSc ETH MTEC Monday, 18.09.2023, 14.00 - 16.45 h, Room tba)
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Application Area (Only necessary and eligible for the Master degree in Applied Mathematics. One of the application areas specified must be selected for the category Application Area for the Master degree in Applied Mathematics. At least 8 credits are required in the chosen application area. Credits from other application areas cannot be recognised for further application areas.)
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MAS in Management, Technology, and Economics (MAS MTEC Onboarding Workshop for 1st Semester Students: Freitag, 08.09.2023, 8.30 -17.30 h, LEE E 101)