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A note on changes in additive risky benefits and risky costs

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  • Mario Menegatti

Abstract

We introduce a distinction between additive risky benefits and additive risky costs, showing that it is relevant in determining decision maker choices in the presence of changes in risk. Results obtained show the specific role of the order of risk change when facing the two types of risk. Similarities and differences with the case of multiplicative risks are discussed. Moreover, the analysis is performed in two models studying respectively saving and self‐protection and provides new applied results for both, some with reference to background risks.

Suggested Citation

  • Mario Menegatti, 2023. "A note on changes in additive risky benefits and risky costs," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(3), pages 753-763, September.
    • Handle: RePEc:bla:ijethy:v:19:y:2023:i:3:p:753-763
    DOI: 10.1111/ijet.12367
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    References listed on IDEAS

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    6. Mario Menegatti & Richard Peter, 2022. "Changes in Risky Benefits and in Risky Costs: A Question of the Right Order," Management Science, INFORMS, vol. 68(5), pages 3625-3634, May.
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