Should More Risk-Averse Agents Exert More Effort
Consider an agent facing a risky distribution of losses who can change this distribution by exerting some effort. Should he exert more effort when he becomes more risk-averse? For instance, should we expect more risk-averse drivers to drive more cautiously? In this article, we give sufficient conditions under which the answer is positive, using results presented in Jewitt (1989). We first extend the standard models of self-insurance and self-protection and show that the comparative statics depends only on the effect of effort on the net loss. We then present conditions for the continuous case with applications. The Geneva Papers on Risk and Insurance Theory (1999) 24, 19â€“28. doi:10.1023/A:1008729115022
(This abstract was borrowed from another version of this item.)
|Date of creation:||1998|
|Contact details of provider:|| Postal: Bâtiment ENSAE, 5 rue Henry LE Chatelier, 91120 Palaiseau|
Phone: 01 41 17 60 81
Web page: http://crest.science
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:crs:wpaper:98-12. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sri Srikandan)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.