IDEAS home Printed from https://ideas.repec.org/a/bla/jrinsu/v77y2010i4p749-766.html
   My bibliography  Save this article

Fear of Loss and Happiness of Win: Properties and Applications

Author

Listed:
  • Jingyuan Li

Abstract

This article proposes two coefficients, “fear of loss” (FL) and “happiness of win” (HW), to capture the variation of risk attitude with respect to wealth. Several properties of interpersonal comparisons of FL and HW are achieved. We present three applications in the default risk bargaining problem (Tibiletti, 2006) to demonstrate that these properties can deliver more shortcut bargaining conditions and unambiguous comparative static results in situations involving interpersonal risk exchanges. We show that FL and HW coefficients are instrumental in explaining the comparative diffidence between an insurer and an insured.

Suggested Citation

  • Jingyuan Li, 2010. "Fear of Loss and Happiness of Win: Properties and Applications," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(4), pages 749-766, December.
  • Handle: RePEc:bla:jrinsu:v:77:y:2010:i:4:p:749-766
    DOI: 10.1111/j.1539-6975.2010.01364.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1539-6975.2010.01364.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.1539-6975.2010.01364.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Eeckhoudt, Louis & Pestieau, Pierre, 2008. "A note on longevity enhancing investment," Economics Letters, Elsevier, vol. 101(1), pages 57-59, October.
    2. Aumann, Robert J & Kurz, Mordecai, 1977. "Power and Taxes," Econometrica, Econometric Society, vol. 45(5), pages 1137-1161, July.
    3. Parkash Chander, 2007. "Income Tax Evasion and the Fear of Ruin," Economica, London School of Economics and Political Science, vol. 74(294), pages 315-328, May.
    4. Viscusi, W Kip, 1993. "The Value of Risks to Life and Health," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1912-1946, December.
    5. Parkash Chander, 2006. "Repetitive risk aversion," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(3), pages 701-711, November.
    6. Luisa Tibiletti, 2006. "A Shortcut Way of Pricing Default Risk Through Zero‐Utility Principle," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 73(2), pages 303-308, June.
    7. Jones-Lee, M W, 1980. "Maximum Acceptable Physical Risk and a New Measure of Financial Risk-Aversion," Economic Journal, Royal Economic Society, vol. 90(359), pages 550-568, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Spreeuw, Jaap, 2014. "Archimedean copulas derived from utility functions," Insurance: Mathematics and Economics, Elsevier, vol. 59(C), pages 235-242.
    2. Wang, Jianli & Wang, Hongxia & Yick, Ho Yin, 2019. "How do changes in risk and risk aversion affect self-protection with Selden/Kreps–Porteus preferences?," Insurance: Mathematics and Economics, Elsevier, vol. 88(C), pages 1-6.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maurizio Caserta & Francesco Reito, 2015. "Minimum taxation as a luxury good," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(3), pages 301-310, December.
    2. Eeckhoudt, Louis R. & Hammitt, James K., 2004. "Does risk aversion increase the value of mortality risk?," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 13-29, January.
    3. Christian Gollier & James Hammitt & Nicolas Treich, 2013. "Risk and choice: A research saga," Journal of Risk and Uncertainty, Springer, vol. 47(2), pages 129-145, October.
    4. Jérôme Foncel & Nicolas Treich, 2005. "Fear of Ruin," Journal of Risk and Uncertainty, Springer, vol. 31(3), pages 289-300, December.
    5. Spreeuw, Jaap, 2014. "Archimedean copulas derived from utility functions," Insurance: Mathematics and Economics, Elsevier, vol. 59(C), pages 235-242.
    6. Thomas Eichner & Rüdiger Pethig, 2015. "Efficient Management of Insecure Fossil Fuel Imports through Taxing Domestic Green Energy?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(5), pages 724-751, October.
    7. Friedrich Breyer & Stefan Felder, 2002. "The Dead-Anyway Effect Revis(it)ed," Discussion Papers of DIW Berlin 302, DIW Berlin, German Institute for Economic Research.
    8. Orley Ashenfelter & Michael Greenstone, 2004. "Estimating the Value of a Statistical Life: The Importance of Omitted Variables and Publication Bias," American Economic Review, American Economic Association, vol. 94(2), pages 454-460, May.
    9. Berliant, Marcus & Gouveia, Miguel, 2022. "On the Political Economy of Nonlinear Income Taxation," MPRA Paper 113140, University Library of Munich, Germany.
    10. Farzin, Y. Hossein & Akao, Ken-Ichi, 2005. "Non-pecuniary Work Incentive and Labor Supply," Working Papers 190910, University of California, Davis, Department of Agricultural and Resource Economics.
    11. James Roy Lesidan & Nadine Grace Caido & Oliver Semblante & Floro Junior Roque & Jejomar Bulan & Jumar Cadondon & Maria Cecilia Galvez & Edgar Vallar, 2025. "Estimating Health and Economic Benefits from PM2.5 Reduction in Fishery-Based Communities: A Sector-Specific Approach to Sustainable Air Quality Management in the Philippines," Sustainability, MDPI, vol. 17(3), pages 1-22, February.
    12. Buzby, Jean C. & Ready, Richard C. & Skees, Jerry R., 1995. "Contingent Valuation in Food Policy Analysis: A Case Study of a Pesticide-Residue Risk Reduction," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 27(2), pages 613-625, December.
    13. Groot, Wim & Maassen van den Brink, Henriette, 2007. "The health effects of education," Economics of Education Review, Elsevier, vol. 26(2), pages 186-200, April.
    14. Laura A. Bakkensen & Robert O. Mendelsohn, 2016. "Risk and Adaptation: Evidence from Global Hurricane Damages and Fatalities," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(3), pages 555-587.
    15. James Hines & Hilary Hoynes & Alan Krueger, 2001. "Another Look at Whether a Rising Tide Lifts All Boats," Working Papers 833, Princeton University, Department of Economics, Industrial Relations Section..
    16. Gibson, John & Barns, Sandra & Cameron, Michael & Lim, Steven & Scrimgeour, Frank & Tressler, John, 2007. "The Value of Statistical Life and the Economics of Landmine Clearance in Developing Countries," World Development, Elsevier, vol. 35(3), pages 512-531, March.
    17. Patrick Carlin & Brian E. Dixon & Kosali I. Simon & Ryan Sullivan & Coady Wing, 2022. "How Undervalued is the Covid-19 Vaccine? Evidence from Discrete Choice Experiments and VSL Benchmarks," NBER Working Papers 30118, National Bureau of Economic Research, Inc.
    18. Paul R. Zimmerman, 2004. "State executions, deterrence, and the incidence of murder," Journal of Applied Economics, Universidad del CEMA, vol. 7, pages 163-193, May.
    19. Dusanee Kesavayuth & Robert Rosenman & Vasileios Zikos, 2013. "Does Personality Affect how People Perceive their Health?," Working Papers 2013-13, School of Economic Sciences, Washington State University.
    20. Maik T. Schneider & Ralph Winkler, 2021. "Growth and Welfare under Endogenous Lifetimes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(4), pages 1339-1384, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jrinsu:v:77:y:2010:i:4:p:749-766. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/ariaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.