Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/85324
Authors: 
Hofmann, Annette
Peter, Richard
Year of Publication: 
2012
Series/Report no.: 
Working Papers on Risk and Insurance 26
Abstract: 
This paper studies the effect of increased risk aversion on self-insurance and self-protection in a two-period framework. Here risk management incentives and consumption smoothing incentives are traded off, and the monotonic relationship between self-insurance and risk aversion may no longer hold as more risk-averse agents cannot always afford spending more on self-insurance. A very similar relationship holds for self-protection making self-insurance and self-protection much more alike in a two-period model. We also extend the model to a joint analysis of self-insurance/self-protection and saving decisions.
Subjects: 
self-insurance
self-protection
risk aversion
time structure
Document Type: 
Working Paper

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