IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v115y2025i5p1597-1649.html
   My bibliography  Save this article

Risk Aversion and Insurance Propensity

Author

Listed:
  • Fabio Maccheroni
  • Massimo Marinacci
  • Ruodu Wang
  • Qinyu Wu

Abstract

We provide a new foundation of risk aversion by showing that this attitude is fully captured by the propensity to seize insurance opportunities. In our main results, we first characterize Arrow-Pratt (1963–1964) risk aversion in terms of propensity to full insurance and the stronger notion of risk aversion of Rothschild and Stiglitz (1970) in terms of propensity to partial insurance. We then extend the analysis to comparative risk aversion by showing that the classical notion of Yaari (1969) corresponds to comparative propensity to full insurance, while the stronger notion of Ross (1981) corresponds to comparative propensity to partial insurance.

Suggested Citation

  • Fabio Maccheroni & Massimo Marinacci & Ruodu Wang & Qinyu Wu, 2025. "Risk Aversion and Insurance Propensity," American Economic Review, American Economic Association, vol. 115(5), pages 1597-1649, May.
    • Handle: RePEc:aea:aecrev:v:115:y:2025:i:5:p:1597-1649
    DOI: 10.1257/aer.20231529
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/aer.20231529
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://www.aeaweb.org/articles/materials/22931
    Download Restriction: no
    File URL: https://libkey.io/10.1257/aer.20231529?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G52 - Financial Economics - - Household Finance - - - Insurance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:115:y:2025:i:5:p:1597-1649. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.