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Safety, in Numbers

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  • Marilyn Pease
  • Mark Whitmeyer

Abstract

We introduce a way to compare actions in decision problems. An action is safer than another if the set of beliefs at which the decision-maker prefers the safer action increases in size (in the set inclusion sense) as the decision-maker becomes more risk averse. We provide a full characterization of this relation and show that it is equivalent to a robust concept of single-crossing. We discuss applications to investment hedging, security design, and game theory.

Suggested Citation

  • Marilyn Pease & Mark Whitmeyer, 2023. "Safety, in Numbers," Papers 2310.17517, arXiv.org, revised Feb 2024.
    • Handle: RePEc:arx:papers:2310.17517
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