WMU News

Economics lecture series takes on risky topic

Sept. 7, 2001

KALAMAZOO -- What do gambling, farming and going without life or health insurance have in common? They are all risky ventures that have an undeniable impact on the economy.

Risk and its economic effects will be explored in the annual Werner Sichel Lecture-Seminar Series at Western Michigan University beginning this month.

The series will focus on "The Economics of Risk," and feature a number of national scholars who will examine the occurrence and impact of risk in the economy. Topics to be addressed include auctions and the "winner's curse," health insurance accessibility, casinos and agriculture.

"Risk is defined as something with an uncertain outcome. You make a decision today when you don't know what the future will bring," says Dr. Donald J. Meyer, associate professor of economics and director of the series. "People are generally risk-averse. They try to avoid risk by passing the risk on to someone else, which is why we have thriving insurance markets. At the same time, there are people who gamble, which is engaging in a risky activity, because they get enjoyment out of it. There are a number of places in the economy where risk is important."

The series will begin by looking at risk incurred at auctions and the "winner's curse" in a presentation by Dr. John H. Kagel, at 3 p.m. Wednesday, Sept. 12, in Room 3508 of Knauss Hall.

Kagel, the University Chaired Professor of Economics at Ohio State University, will address "Common Value Auctions and the Winner's Curse: Lessons from the Economics Laboratory." In a common value auction, such as a mineral lease auction, bidders face significant risk as to the monetary value of that on which they are bidding. The "winner's curse" refers to the successful bidders having overpaid for what they bought. Kagel, a member of the National Science Foundation's Panel for Decision Risk and Management Science, is one of the pioneers of using experimental methods in economics research. He has written several books, including "The Handbook of Experimental Economics" and the forthcoming "Common Value Auctions and the Winner's Curse."

Other speakers scheduled in this year's series and the topics they will address are:

"Sharing High Risks--How Government Can Make Health Insurance Markets More Efficient and More Accessible," Dr. Katherine Swartz, professor of health policy and management at Harvard University, Wednesday, Oct. 10;

"States of the World and the State of Decision Science," Dr. Mark J. Machina, professor of economics at the University of California-San Diego, Wednesday, Nov. 7;

"Gambling with the Future: Economic and Social Perspectives on the Casinos in America," Dr. William R. Eadington, professor of economics at the University of Nevada-Reno, Wednesday, Jan. 16;

"Risk and Agriculture: Issues and Evidence," Dr. Rulon Dean Pope, professor of economics at Brigham Young University, Wednesday, Feb. 20; and

"Managing Risk Before It Manages You," Dr. Keith J. Crocker, the Waldo O. Hildebrand Professor of Risk Management and Insurance at the University of Michigan, Wednesday, March 13.

All lectures begin at 3 p.m. in Room 3508 of Knauss Hall and are free and open to the public. As part of their visit to WMU, scholars also will participate in a course for graduate and advanced undergraduate students.

In its 38th year, the Werner Sichel Lecture-Seminar Series is sponsored by WMU's College of Arts and Sciences and Department of Economics and the W.E. Upjohn Institute for Employment Research.

For more information, contact Meyer at (616) 387-5531 or <donald.meyer@wmich.edu> or contact the WMU economics department at (616) 387-5535.

Media contact: Marie Lee, 616 387-8400, marie.lee@wmich.edu

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