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Certainty Equivalent: Many Meanings of a Mean

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  • Elisa Pagani

    () (Department of Economics (University of Verona))

Abstract

The aim of this survey is to provide an overview of the main definitions of certainty equivalent and its applications in the one-dimensional and multidimensional framework. We also show the relationships between the concept of certainty equivalent and other definitions related to different fields. In particular, we focus on financial and economic approaches that imply risk or inequality measurement.

Suggested Citation

  • Elisa Pagani, 2015. "Certainty Equivalent: Many Meanings of a Mean," Working Papers 24/2015, University of Verona, Department of Economics.
  • Handle: RePEc:ver:wpaper:24/2015
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    Cited by:

    1. Birgit Rudloff & Firdevs Ulus, 2019. "Certainty Equivalent and Utility Indifference Pricing for Incomplete Preferences via Convex Vector Optimization," Papers 1904.09456, arXiv.org, revised Aug 2020.

    More about this item

    Keywords

    certainty equivalent; risk; inequality; efficiency; willingness to pay.;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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