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Even (Mixed) Risk Lovers Are Prudent

Author

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  • David Crainich
  • Louis Eeckhoudt
  • Alain Trannoy

Abstract

The purpose of this note is to analyze properties of the risk lovers? utility function beyond the positive sign of its second order derivative. We show that??contrarily to a priori beliefs??risk lovers are prudent and are willing to accumulate precautionary savings.

Suggested Citation

  • David Crainich & Louis Eeckhoudt & Alain Trannoy, 2013. "Even (Mixed) Risk Lovers Are Prudent," American Economic Review, American Economic Association, vol. 103(4), pages 1529-1535, June.
    • Handle: RePEc:aea:aecrev:v:103:y:2013:i:4:p:1529-35
    Note: DOI: 10.1257/aer.103.4.1529
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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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