Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
972967 | Mathematical Social Sciences | 2010 | 7 Pages |
Abstract
This paper shows that the notions of prudence, temperance, edginess, and, more generally, risk apportionment of any degree are the consequences of the natural idea that the sensitivity to detrimental changes should decrease with initial wealth. In the setting of Epstein and Tanny (1980), this turns out to be equivalent to the supermodularity of the expected utility for some specific 4-state lotteries.
Related Topics
Physical Sciences and Engineering
Mathematics
Applied Mathematics
Authors
Michel Denuit, Béatrice Rey,