The Microeconomics of Risk and Information

by Richard Watt

About this book

The Microeconomics of Risk and Information covers the principal areas in the field, including risk aversion, simple portfolio theory, precautionary savings, production under risk, risk sharing in the Edgeworth box, adverse selection and moral hazard. Keeping to a strict two-dimensional environment and using only some basic calculus, this textbook is written principally for students in advanced undergraduate and beginning graduate courses in economics, finance, and other fields, who have studied microeconomics at the intermediate level. Compact and clear, the book reflects the author’s twenty-year experience teaching the course in the one-semester format to students around the world.


This is a long-awaited book on risk and uncertainty pitched at the intermediate level. Its approach is intuitive with full graphical treatments, while still rigorous. It would make an ideal textbook for undergraduate students who want to master the economics of risk and uncertainty. -Ichiro Obara, Associate Professor in the Department of Economics, University of California, Los Angeles, USA
This book offers a good introduction to the microeconomics of behaviour under risk, treating consumers, producers and market interaction in a unified framework. It is ideal for an introductory course and as a reference source. -Joop Hartog, Professor of Economics, Amsterdam School of Economics, the Netherlands
The search for a final year undergraduate textbook on risk and information is finally over. The style and level of this book makes it an excellent extension to standard theory of choice courses. It provides understanding rather than just information. -Doctor Murat Genç, Department of Economics, University of Otago, New Zealand

The author

Richard Watt is an Associate Professor of Economics at the University of Canterbury, New Zealand. He has been actively researching in the area of the economics of risk and insurance for the past 15 years and has published many papers in this field, including a paper that won the Witt Award for the best publication in the Journal of Risk and Insurance in 2006. He has been an active member of the European Group of Risk and Insurance Economists for the past 14 years, and served as the group’s president during 2008/09.