This book uses real-world examples to show how individual and collective risks can be blended and treated in a reliable decision-making framework that draws its inspiration from decision theory and market based mechanisms. It then goes into deeper detail by looking at the implications of having to face risks (a) where some kind of probabilistic description is available and (b) where none is available, using the example of insurable risks vs non-insurable risks. Again, by using real-world examples it shows how decision-makers can cope with such situations by a proper understanding and use of modern financial techniques. The last section tackles the challenge of the time dimension: Most risks are temporal and should be treated as such by decision makers. Kast and Lapied set the final touch to their toolkit and illustrate through numerous examples how this can be done. By the end of the book, the reader should be able to understand: consumer choice theory. choice under uncertainty, and insurance problems asymmetric information and market failure investment finance with selection and hidden action
Book Details:
- Author: Robert Kast
- ISBN: 9780470032824
- Year Published: 2006
- Pages: 242
- BISAC: BUS027000, BUSINESS & ECONOMICS/Finance
About the Book and Topic:
This book uses real-world examples to show how individual and collective risks can be blended and treated in a reliable decision-making framework that draws its inspiration from decision theory and market based mechanisms. It then goes into deeper detail by looking at the implications of having to face risks (a) where some kind of probabilistic description is available and (b) where none is available, using the example of insurable risks vs non-insurable risks. Again, by using real-world examples it shows how decision-makers can cope with such situations by a proper understanding and use of modern financial techniques. The last section tackles the challenge of the time dimension: Most risks are temporal and should be treated as such by decision makers. Kast and Lapied set the final touch to their toolkit and illustrate through numerous examples how this can be done. By the end of the book, the reader should be able to understand: consumer choice theory. choice under uncertainty, and insurance problems asymmetric information and market failure investment finance with selection and hidden action
Insuring catastrophic risks, managing non-financial risks, public preventive decisions in front of new enemies, environmental damages or preservation of drinking water: New risks appear for which usual management tools seem irrelevant. Awareness of such new risks encouraged the emergence of the Precautionary Principle for environmental issues. It has also been invoked for health and industrial risks. Some countries have introduced new laws enforcing management and decision methods in order to face the new risks in accordance with the principle. Three main points arise in the principle which question classical risk analysis for public prevention plans, for individual decision analysis as well as for management of financial investments: The timing of decisions Scientific uncertainty Collective impacts.
First book to merge the three economic, decision and finance theories to cover the scope of new risks in public and private investments, and to explain the role of Market Finance Theory in the analysis of new risks An easy access to some useful concepts that arise from mathematically involved models Discusses the most recent research results and applies them to real-life situations Limitations of the scope of models are too often forgotten in applied works. This book concentrates on those limitations and shows how recent research results have enlarged the scope of the theories at hand. Deals with the valuation of risks (either collective or private) and shows how a sound use of modern financial concepts can help decision makers reach better decisions.
About the Author
Robert KAST, Director of Research at the Centre National de la Recherche Scientifique (CNRS) (tenure research position equivalent to university professor) at GREQAM. He teaches post-grad students in microeconomics of uncertainty, financial markets theory, decision theory. André LAPIED Professor, Université d’Aix-Marseille, France. Teaches post-grad lectures in financial markets and graduate courses in microeconomics, economy of risk.