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University Bulletin
Undergraduate Degree Programs

These course descriptions are not being updated as of August 1, 2016. Current course descriptions are maintained in LionPATH.

Economics (ECON)

ECON 417W The Economics of Uncertainty (3) Uncertainty is examined in contracts, with an emphasis on limited liability. Asymmetric information and economic puzzles are also considered.

ECON 417W The Economics of Uncertainty (3)

This course studies the allocation of resources under uncertainty. Decisions without perfect information require the use of probability theory and expected utility preferences. The seminal work of Arrow and Debreu is used as a starting point. Probability and utility theory are then used to interpret insurance contracts. Limited liability is introduced and the Modigliani-Miller Theorem is applied to loan guarantees, deposit insurance, and insurance claims. Finally, asymmetric information is discussed and the resulting problems of moral hazard and adverse selection are addressed.

The course objectives are to introduce students to the theoretical framework used by economists to study uncertainty and to apply that framework in order to explain various regularities observed when decisions are made without complete information, to examine the empirical evidence, and to consider policy issues in this area.

The course will count toward both the major and a minor in economics.

General Education: None
Diversity: None
Bachelor of Arts: None
Effective: Summer 2008
Prerequisite: ECON 402 orECON 444

Note : Class size, frequency of offering, and evaluation methods will vary by location and instructor. For these details check the specific course syllabus.


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Course descriptions are stored in LionPATH, the University-wide student information system. Please visit the LionPATH Course Catalog to access current course descriptions. At that point, you will be leaving the University Bulletin website.

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