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Risky targets and effort

Author

Listed:
  • Chuang, O-Chia
  • Eeckhoudt, Louis
  • Huang, Rachel J.
  • Tzeng, Larry Y.

Abstract

When decision makers invest in effort to reach their targets, they face multiple sources of risk: first the risk of failure and second the noise that surrounds either the target or the initial situation. In this paper, we examine how effort is adjusted to account for changes in this risky environment.

Suggested Citation

  • Chuang, O-Chia & Eeckhoudt, Louis & Huang, Rachel J. & Tzeng, Larry Y., 2013. "Risky targets and effort," Insurance: Mathematics and Economics, Elsevier, vol. 52(3), pages 465-468.
  • Handle: RePEc:eee:insuma:v:52:y:2013:i:3:p:465-468
    DOI: 10.1016/j.insmatheco.2013.02.004
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    References listed on IDEAS

    as
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    Cited by:

    1. repec:eee:insuma:v:88:y:2019:i:c:p:1-6 is not listed on IDEAS
    2. Crainich, David & Eeckhoudt, Louis & Menegatti, Mario, 2016. "Changing risks and optimal effort," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 97-106.
    3. Huang, Rachel J., 2012. "Ambiguity aversion, higher-order risk attitude and optimal effort," Insurance: Mathematics and Economics, Elsevier, vol. 50(3), pages 338-345.
    4. Huang, Yi-Chieh & Tzeng, Larry Y. & Zhao, Lin, 2015. "Comparative ambiguity aversion and downside ambiguity aversion," Insurance: Mathematics and Economics, Elsevier, vol. 62(C), pages 257-269.
    5. repec:kap:jeczfn:v:128:y:2019:i:2:d:10.1007_s00712-018-00652-6 is not listed on IDEAS
    6. Wong, Kit Pong, 2017. "A note on risky targets and effort," Insurance: Mathematics and Economics, Elsevier, vol. 73(C), pages 27-30.

    More about this item

    Keywords

    Effort; Increase in risk; Stochastic dominance; Higher-order preferences;

    JEL classification:

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

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