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Title:Putting risk in its proper place PDF Logo
Authors:Eeckhoudt, Louis
Schlesinger, Harris
Issue Date:2005
Series/Report no.:CESifo working papers 1462
Abstract:This paper examines preferences towards particular classes of lottery pairs. We show how concepts such as prudence and temperance can be fully characterized by a preference relation over these lotteries. If preferences are defined in an expected-utility framework with differentiable utility, the direction of preference for a particular class of lottery pairs is equivalent to signing the nth derivative of the utility function. What makes our characterization appealing is its simplicity, which seems particularly amenable to experimentation.
Subjects:properness
prudence
risk apportionment
risk aversion
stochastic dominance
temperance
utility premium
JEL:D81
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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