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A Note On The Joint Occurrence Of Insurance And Gambling

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  • JONES, LARRY E.

Abstract

This note provides a formal justification for the Friedman and Savage nonconcavity in the utility of money. This is based on the possibility of indivisibilities in the consumption possibilities set. A precise characterization of when gambling is optimal (and the optimal type) is provided in one special case. Some possible limitations are considered.

Suggested Citation

  • Jones, Larry E., 2008. "A Note On The Joint Occurrence Of Insurance And Gambling," Macroeconomic Dynamics, Cambridge University Press, vol. 12(1), pages 97-111, February.
  • Handle: RePEc:cup:macdyn:v:12:y:2008:i:01:p:97-111_06
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    Cited by:

    1. Lars Ljungqvist & Thomas J. Sargent, 2007. "Do Taxes Explain European Employment? Indivisible Labor, Human Capital, Lotteries, and Savings," NBER Chapters, in: NBER Macroeconomics Annual 2006, Volume 21, pages 181-246, National Bureau of Economic Research, Inc.
    2. Fels, Markus, 2019. "Risk Attitudes with State-Dependent Indivisibilities in Consumption," Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203489, Verein für Socialpolitik / German Economic Association.

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