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La notion économique de prudence. Origine et développements récents

Author

Listed:
  • David Crainich
  • Louis Eeckhoudt

Abstract

The formal definition of the term « prudence » in economics is due to Kimball [1990]. Since then the notion of prudence is linked to the choice of a level of precautionary saving while risk aversion remains perceived as a preference towards a risky situation. In this paper ? after a survey of other publications than that of Kimball ? we show that prudence can also be interpreted as a preference towards risk. We also show that prudence can be used to analyse insurance decisions as well as saving ones. Classification JEL : D81

Suggested Citation

  • David Crainich & Louis Eeckhoudt, 2005. "La notion économique de prudence. Origine et développements récents," Revue économique, Presses de Sciences-Po, vol. 56(5), pages 1021-1032.
    • Handle: RePEc:cai:recosp:reco_565_1021
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    Cited by:

    1. Renaud Bourlès, 2017. "Prevention incentives in long‐term insurance contracts," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(3), pages 661-674, September.
    2. Danau, Daniel, 2020. "Prudence and preference for flexibility gain," European Journal of Operational Research, Elsevier, vol. 287(2), pages 776-785.
    3. Lionel Thomas, 2016. "The optimal contract under adverse selection in a moral-hazard model with a risk-averse agent," Working Papers 2016-09, CRESE.
    4. François Maréchal & Lionel Thomas, 2018. "The Optimal Contract under Adverse Selection in a Moral-Hazard Model with a Risk-Averse Agent," Games, MDPI, vol. 9(1), pages 1-22, March.
    5. Luc Arrondel & Hector Calvo Pardo, 2008. "Les Français sont-ils prudents ? Patrimoine et risque sur les revenus des ménages," PSE Working Papers halshs-00585994, HAL.
    6. Lionel Thomas, 2016. "The optimal contract under adverse selection in a moral-hazard model with a risk-averse agent," Working Papers hal-01374709, HAL.

    More about this item

    JEL classification:

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

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