The Economics of Risk

The Economics of Risk

The Economics of Risk

The Economics of Risk

Synopsis

This book contains a collection of papers that address various aspects of risk, including riskmanagement and how it is applied to decisionmaking and the impact of risk on markets.

Excerpt

Donald J. Meyer

Western Michigan University

Warning

Under the Michigan Equine Activity Liability Act, an Equine Professional is not liable for an injury to or even the death of a participant in an equine activity resulting from an inherent risk of the equine activity.

Michigan Farm Bureau
Farm Bureau Insurance

This sign is posted at the horse stables where my two younger daughters ride horses on Saturday mornings. The sign communicates at least two distinct messages to its reader. First, riding horses is a risky activity. Even though it is a small percentage of riders overall, a number do get injured in horse-riding incidents with the possibility of even sustaining a serious or life-threatening injury. Second, when you decide to ride a horse at these stables, you take on and assume this risk; that is, the stable owner is not in any way liable for an injury that you may incur while participating in equine activities.

Riding horses is just one of almost countless situations in life in which you encounter risk—where you encounter the chance of injury, damage, loss, or of making a dangerous choice. Other examples include the risk of losing your job, the risk of contracting some debilitating disease, the chance of getting in an automobile accident on the way to the shopping mall, and the risk of being struck by lightning in a summer thunderstorm. Risk is all around us and affects us all. No one can escape from its clutches or attain perfect immunity to it. You may decide to not acquire the additional risk of riding a horse by not engaging in that activity, but one cannot so easily avoid the risk of getting cancer or the risk of being hit by a car while crossing the street on the way to school.

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