In this half of the lecture we look at externalities and a few mechanisms to lessen their impact.
In this half of the lecture we introduce social welfare functions and analyse their origins and their optima. We also look at the economics of voting.
Below is the first problem set, on uncertainty.
In this lecture we show assorted examples of solving problems of decisions under uncertainty, and introduce the welfare topic.
In this first lecture, I introduce the course, then we go on to look at rational choice under uncertainty. We’ll discuss expected utility, risk aversion, risk premia, and some of the many “paradoxes” of people’s behaviour under uncertainty. There’ll be a chance to win some money too!