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Changing risks and optimal effort

Listed author(s):
  • Crainich, David
  • Eeckhoudt, Louis
  • Menegatti, Mario

Consider a decision maker who can engage in effort to increase the probability of facing a better risky situation. Intuition suggests that effort should increase when there is a greater difference between the best risky situation and the worse one. We show that this intuition is not necessarily valid and we consider the cases of risk averters and risk lovers.

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File URL: http://www.sciencedirect.com/science/article/pii/S0167268116000172
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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 125 (2016)
Issue (Month): C ()
Pages: 97-106

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Handle: RePEc:eee:jeborg:v:125:y:2016:i:c:p:97-106
DOI: 10.1016/j.jebo.2016.01.009
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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