Optimal prevention and prudence in a two-period model
AbstractThis work shows that in a two-period framework, prudence has an increasing effect on optimal prevention. This conclusion is the opposite to that obtained in a one-period framework [Eeckhoudt and Gollier, Economic Theory 26 (2005), 989-994]. This is due to the opposite effect of prevention on wealth in the period where the risk occurs.
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Bibliographic InfoPaper provided by Department of Economics, Parma University (Italy) in its series Economics Department Working Papers with number 2008-EP03.
Length: 8 pages
Date of creation: 2008
Date of revision:
Other versions of this item:
- Menegatti, Mario, 2009. "Optimal prevention and prudence in a two-period model," Mathematical Social Sciences, Elsevier, vol. 58(3), pages 393-397, November.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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