The value of risk reduction: new tools for ...
Type de document :
Article dans une revue scientifique
Titre :
The value of risk reduction: new tools for an old problem
Auteur(s) :
Crainich, David [Auteur]
UMR CNRS 8179
Eeckhoudt, Louis R. [Auteur]
UMR CNRS 8179
IÉSEG School Of Management [Puteaux]
Hammitt, James K. [Auteur]
UMR CNRS 8179
Eeckhoudt, Louis R. [Auteur]
UMR CNRS 8179
IÉSEG School Of Management [Puteaux]
Hammitt, James K. [Auteur]
Titre de la revue :
Theory and Decision
Pagination :
403--413
Éditeur :
Springer Verlag
Date de publication :
2014-10
ISSN :
0040-5833
Mot(s)-clé(s) en anglais :
Risk aversion
Prudence
Self-protection
Value per statistical life
Prudence
Self-protection
Value per statistical life
Discipline(s) HAL :
Sciences de l'Homme et Société/Economies et finances
Résumé en anglais : [en]
The relationship between willingness to pay (WTP) to reduce the probability of an adverse event and the degree of risk aversion is ambiguous. The ambiguity arises because paying for protection worsens the outcome in the ...
Lire la suite >The relationship between willingness to pay (WTP) to reduce the probability of an adverse event and the degree of risk aversion is ambiguous. The ambiguity arises because paying for protection worsens the outcome in the event the adverse event occurs, which influences the expected marginal utility of wealth. Using the concept of downside risk aversion or prudence, we characterize the marginal WTP to reduce the probability of the adverse event as the product of WTP in the case of risk neutrality and an adjustment factor. For the univariate case (e.g., risk of financial loss), the adjustment factor depends on risk aversion and prudence with respect to wealth. For the bivariate case (e.g., risk of death or illness), the adjustment factor depends on risk aversion and cross-prudence in wealth.Lire moins >
Lire la suite >The relationship between willingness to pay (WTP) to reduce the probability of an adverse event and the degree of risk aversion is ambiguous. The ambiguity arises because paying for protection worsens the outcome in the event the adverse event occurs, which influences the expected marginal utility of wealth. Using the concept of downside risk aversion or prudence, we characterize the marginal WTP to reduce the probability of the adverse event as the product of WTP in the case of risk neutrality and an adjustment factor. For the univariate case (e.g., risk of financial loss), the adjustment factor depends on risk aversion and prudence with respect to wealth. For the bivariate case (e.g., risk of death or illness), the adjustment factor depends on risk aversion and cross-prudence in wealth.Lire moins >
Langue :
Anglais
Comité de lecture :
Oui
Audience :
Internationale
Vulgarisation :
Non
Collections :
Source :
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