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363-1017-00L 3 Credits MSC , NDS D-USYS , D-MTEC , D-MATH
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Risk and Insurance Economics

Lecturers & Examiners: Dr. Cheng Wan
VVZ CR n/a

Last Updated: 2026-06-01 11:30:27

Abstract

Everyday, individuals make decisions under uncertainty. This course covers the following topics in the field of risk and insurance economics:1) Individual decision-making under risk2) Models of insurance demand and supply, and risk sharing3) Information issues in insurance markets4) Topics in 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
MSC , NDS
Frequency
Yearly recurring

Examination

Type
graded semester performance

Course Components

Type Title Time & Place Hours
lecture with exercise Risk and Insurance Economics
  • Wed 14:15-16:00 (CHN C 14)
2 h weekly

Offered In