A More General Measure Of Risk Aversion When Utility Is State-Dependent
AbstractIn this paper, the authors propose a method for comparing risk aversion within the state-dependent utility model. This model is useful for analyzing economic problems relating to health or life. The authors extend the Arrow-Pratt measure of risk aversion to the case where utility is state-dependent. Their measure is a generalization of earlier methods of comparing risk aversion in this context, since it agrees with them where they are defined, but can be applied to a much larger class of utility functions. The authors show how their analysis can be applied to a simple model of demand for insurance. Copyright 1991 by Royal Economic Society.
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Bibliographic InfoPaper provided by Australian National University - Department of Economics in its series Papers with number 177.
Length: 34 pages
Date of creation: 1989
Date of revision:
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Postal: THE AUSTRALIAN NATIONAL UNIVERSITY, DEPARTMENT OF ECONOMICS, RESEARCH SCHOOL of PACIFIC STUDIES, RESEARCH SCHOOL OF SOCIAL SCIENCES, G.P.O. 4, CANBERRA ACT 2601 AUSTRALIA..O. BOX 4 CANBERRA 2601 AUSTRALIA.
Web page: http://economics.anu.edu.au/economics.htm
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insurance ; risk aversion ; health ; preference functions;
Other versions of this item:
- Kelsey, David & Nordquist, Gerald L, 1991. "A More General Measure of Risk Aversion When Utility Is State-Dependent," Oxford Economic Papers, Oxford University Press, vol. 43(1), pages 59-74, January.
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- Liqun Liu & Andrew Rettenmaier & Thomas Saving, 2009. "Conditional payments and self-protection," Journal of Risk and Uncertainty, Springer, vol. 38(2), pages 159-172, April.
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