A More General Measure Of Risk Aversion When Utility Is State-Dependent
In this paper, the authors propose a method for comparing risk aversion within the state-dependent utility model. This model is useful for analyzing economic problems relating to health or life. The authors extend the Arrow-Pratt measure of risk aversion to the case where utility is state-dependent. Their measure is a generalization of earlier methods of comparing risk aversion in this context, since it agrees with them where they are defined, but can be applied to a much larger class of utility functions. The authors show how their analysis can be applied to a simple model of demand for insurance. Copyright 1991 by Royal Economic Society.
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|Date of creation:||1989|
|Date of revision:|
|Contact details of provider:|| Postal: THE AUSTRALIAN NATIONAL UNIVERSITY, DEPARTMENT OF ECONOMICS, RESEARCH SCHOOL of PACIFIC STUDIES, RESEARCH SCHOOL OF SOCIAL SCIENCES, G.P.O. 4, CANBERRA ACT 2601 AUSTRALIA..O. BOX 4 CANBERRA 2601 AUSTRALIA.|
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