Examine tools that professionals use to hedge against financial risk, such as forward contracts and financial options. Study the suitability of these instruments for individuals. Then probe a more flexible strategy: real options, which are opportunities that can be seized or declined as conditions warrant..

When is a risky project worth doing? Learn how corporate managers decide whether they should undertake a new enterprise. Discover that simple graphic aids, such as scenario analysis and decision trees, are powerful tools for weighing risk in both business and daily life..

Focus on a special case of moral hazard: the principal-agent problem, in which an agent is appointed to handle a matter beyond the expertise of the person doing the hiring (the principal). The agent may easily take unfair advantage of this situation, which covers everything from home repair to government contracting..

Delve into the uncertain realm of compensation contracts, which ideally motivate employees to do a good job, but too often have unintended consequences. Survey the pluses and minuses of efficiency wages, piecework, milestone payments, commissions, promotions, stock options, and other incentives..

Use game theory to shed light on strategic interactions, which are competitive transactions involving people or organizations. Such interactions can range from negotiating the sale of a house to pricing products for maximum sales. As an example, analyze an intriguing competition between two potato chip brands..

In dealing with uncertainty, it makes sense to have an arsenal of different strategies. Explore five techniques for risk management that can be used in every sphere of life: producing information, diversifying, sharing risk, avoiding risk, and absorbing risk. Probe instructive examples of each..

Government policies are a major source of uncertainty, since they can alter our lives in unpredictable ways. Study the surprising outcomes from several government interventions in the U.S. economy. In particular, look at the regulatory cycle model, which shows how a complex system responds to new regulations..

Close by learning how to take the economic “stress test,” inspired by bank evaluations made in the wake of the 2008 financial crisis. This simple exercise helps you anticipate the most significant reversals you are likely to meet, helping you approach uncertainty with confidence and calm..

Learn to cope with uncertainty and risk with advice from a master economist. Economic uncertainty is like the weather: you can’t stop storms, but understanding them prepares you. Uncertainty is beyond our control, but when you take the mystery and dread out of uncertainty, you can respond much more effectively. The practical and empowering lectures of The Economics of Uncertainty give you tools to deal with risk..

Investigate the multitude of ways you can insure against misfortune, from extended warranties to travel insurance to identity-theft protection—not to mention health, car, home, and life insurance. Learn how insurance products work, and get tips on what you should cover and at what value..