IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Recursive Utility, Precautionary Saving and the Demand for Insurance

Listed author(s):
  • GOLLIER, Christian
  • Eric RENAULT
  • Jean-Charles ROCHET

We consider in this paper the interaction between precautionary savings and insurance demand. Under the standard intertemporal expected utility framework, the effect of an increase in the concavity of the utility function is ambiguous because of the inability of this framework to distinguish between the resistance to intertemporal substitution and risk aversion. Using Kreps-Porteus preferences, we show that an increase in the resistance to intertemporal substitution has an unambiguous effect on saving. If risk aversion is decreasing, it also yields an unambiguous effect on insurance demand. We also compare the two types of preference ordering in term of the optimal saving and insurance strategy.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Paper provided by Risk and Insurance Archive in its series Working Papers with number 019.

in new window

Date of creation: Jun 1994
Handle: RePEc:wop:riskar:019
Contact details of provider:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wop:riskar:019. 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: (Thomas Krichel)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.