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Adding one risk to another: generalizing the unavoidable (background) risk

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  • Moawia Alghalith

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Abstract

ResumenEste artículo ofrece una generalización del modelo de riezgo subyacente. En primer lugar, se relajan los supuestos de independencia. En segundo lugar, se adopta una forma funcional general. Tercero, se adopta un tipo de riesgo general. Adicionalmente se presenta una nueva forma general de riesgo subyacente.AbstractThis paper provides a complete generalization of the background risk models. In so doing, first, it relaxes the independence assumption. Second, it adopts a general functional form. Third, it adopts a general type of risk. Furthermore, it introduces a new general form of background risk.

Suggested Citation

  • Moawia Alghalith, 2011. "Adding one risk to another: generalizing the unavoidable (background) risk," Revista de Economía del Rosario, Universidad del Rosario, June.
  • Handle: RePEc:col:000151:008958
    as

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    File URL: http://revistas.urosario.edu.co/index.php/economia/article/view/1913/1690
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    References listed on IDEAS

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    1. Machina, Mark J, 1982. ""Expected Utility" Analysis without the Independence Axiom," Econometrica, Econometric Society, vol. 50(2), pages 277-323, March.
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    4. Gollier, Christian & Pratt, John W, 1996. "Risk Vulnerability and the Tempering Effect of Background Risk," Econometrica, Econometric Society, vol. 64(5), pages 1109-1123, September.
    5. Pratt, John W, 1988. "Aversion to One Risk in the Presence of Others," Journal of Risk and Uncertainty, Springer, vol. 1(4), pages 395-413, December.
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    More about this item

    Keywords

    Background risk; uncertainty;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D2 - Microeconomics - - Production and Organizations

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