The Economics of Risk and Time

The Economics of Risk and Time examines how individuals and businesses make choices involving uncertainty and the value of time. It considers how people assess potential risks when investing money or making decisions, weighing possible gains against possible losses. Time plays a crucial role, as the value of money can change over time due to inflation or interest rates. For example, receiving $100 today is more valuable than getting $100 a year from now. Understanding these concepts helps in making informed financial decisions, balancing immediate needs with long-term goals.