• Evaluate the effects of behavioral decision models on risk management and insurance markets.
• Evaluate experimental evidence on preferences over risk, ambiguity and time delay, which are key behavioral traits in behavioral decision models.
• Undertake welfare evaluations of risk management and insurance products and regulatory policies.

Behavioral risk management and insurance applies alternative models of human behavior to risk

management and insurance decisions. The use of alternative models of decision making allows an

evaluation of the effect of different behavioral assumptions on inferences about insurance markets

and risk management.

The course will consider theoretical, experimental and econometric applications of different

behavioral assumptions. We will review the literature and provide a systematic overview of the field

of behavioral risk management and insurance. We will consider the effect of allowing for rankdependent

probability weighting, loss aversion, ambiguity and the presence of traded and non-traded

assets on the classic theorems of risk management and insurance economics. The course will also

consider experimental evidence on different facets of insurance and risk management tools from the

laboratory and the field, including randomized control trials of alternative insurance products.

Finally, the course will consider the subtle econometric issues that arise when one estimates models

of behavior towards risk management and insurance, particularly when using naturally occurring

data.

A unifying theme of the course is the importance of allowing for alternative behavioral assumptions

when undertaking welfare evaluations of risk management and insurance products and regulatory

policies. The course also contains numerous cautions about subtleties in theoretical, experimental

and econometric work in the field of behavioral risk management and insurance

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