Article ID Journal Published Year Pages File Type
5069387 Finance Research Letters 2014 6 Pages PDF
Abstract

In the mean-variance framework, insurance demand goes down when the expected size of insurable losses decreases or insurance premia increase if the elasticity of risk aversion with respect to expected wealth exceeds -1. In terms of the expected-utility approach, this condition is equivalent to the index of partial relative risk aversion being lower than one.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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