Abstract
This paper examines the determinants of optimal effort in an intertemporal self-protection model. We separate attitude toward risk and attitude toward intertemporal substitution by adopting Selden/Kreps–Porteus preferences. We not only explore the sufficient conditions on risk preferences for guaranteeing the unambiguous effects of changes in risk on the optimal effort level but also show how a change in risk aversion alone affects the optimal effort level.
Original language | English |
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Pages (from-to) | 1-6 |
Number of pages | 6 |
Journal | Insurance: Mathematics and Economics |
Volume | 88 |
Early online date | 27 May 2019 |
DOIs | |
Publication status | Published - 1 Sept 2019 |
Keywords
- Expected-utility
- Intertemporal substitution
- Risk aversion
- Self-protection
- Stochastic dominance