Decisions and Uncertainty
Instructor: Paolo Ghirardato and Daniele Pennesi
NEWS:
COURSE LECTURES 2024-2025 FALL SEMESTER:
Like all instruction in UniTo during the fall semester, the course will be taught in person. The course schedule (with venues) is the following:
- THURSDAYS 11:15-13:15, Aula 9
- FRIDAYS 9:00-12:00, Aula Corradetti
MIDTERM EXAM: The midterm exam will be held on THURSDAY, NOVEMBER 13th, at class time. Please enroll in the exam via Esse3 or, if you have problems with Esse3, by sending me an email by Monday, November 10th.
OFFICE HOURS:
Weekly office hours are held during the semester the course is taught at specified times (see below). However, Professors Ghirardato and Pennesi are available to meet students by appointment. Send them an email by clicking here for Ghirardato or here for Pennesi.
For the fall months, Prof. Ghirardato is available to meet students (in his office in the Dipartimento, 3.22 on the 3rd floor) on the following days:
He is also available at other times, by email appointment.
Prof. Pennesi's office hours will be announced by the time he starts teaching his section of the course (mid-November).
SYLLABUS: This is a course --elective for the Master's degrees (LM) in Economics, in Quantitative Finance and Insurance, Stochastics and Data Science and in Matematica (Indirizzo modellistico-probabilistico)-- which introduces students to the formalization and analysis of decision making in a single-person and in a strategic (i.e., game theory) environment. While the course's emphasis is on theoretical issues, some attention is also given to the application of concepts to business, economic and financial problems. Topics in parenthesis may be omitted in the interest of time.
- Introduction and overview of decision models
- Known probabilities: The Expected Utility model and its consequences
- (Your decision problem, in detail. An application of expected utility)
- Subjective probability: The Subjective Expected Utility model (Anscombe-Aumann and Savage)
- Non-expected utility models: The Allais and Ellsberg paradoxes and their rationalizations
- Dynamic choice: basic concepts
- Choice over time with no uncertainty
- Choice over time with uncertainty
The exam is mostly going to be based on the class notes and some readings assigned in class. However, for supplemental reading (and some homework exercises) the following are the suggested textbooks for the course:
- David Kreps, Notes on the Theory of Choice, Westwood Press, 1988 (hard, but good as reference), chapters 1-12
- Tomasz Strzalecki, Decision Theory, lecture notes, 2017, chapters 2, 4 and 6
- (Howard Raiffa, Decision Analysis, McGraw-Hill 1997 (1968), chapters 1-5, on your decision problem)
EXERCISES: The following exercises are very important as practice and verification of your understanding of the course material.
PAST EXAMS: Here are some past exams for this course.
CONTACTS
paolo.ghirardato at unito.it, daniele.pennesi at unito.it
Back to Paolo's page
Created: 29/09/16. Last updated: 24/10/2025