| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 5059233 | Economics Letters | 2014 | 4 Pages |
Abstract
The utility premium is generally defined as the pain or reduction in expected utility caused by an nth-degree risk increase, where nâ¥2. While it is a very useful concept in understanding a decision maker's choice in uncertain situations, the utility premium is not interpersonally comparable. This note shows that the monetary utility premium-the utility premium divided by the expected marginal utility at the random starting wealth-is interpersonally comparable, and the comparison is characterized by Ross more risk aversion of the corresponding degree.
Related Topics
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Economics, Econometrics and Finance
Economics and Econometrics
Authors
Jingyuan Li, Liqun Liu,