Precautionary effort : another trait for prudence

Jianli WANG; Jingyuan LI

doi:10.1111/jori.12054

Precautionary effort : another trait for prudence

Jianli WANG, Jingyuan LI

Department of Finance and Insurance

Research output: Journal Publications › Journal Article (refereed) › peer-review

28 Citations (Scopus)

Abstract

This paper shows that, in the temporal model of Eeckhoudt et al. (2012), prudence alone is sufficient to obtain a precautionary effort. Moreover, our conclusions relax the assumption of the convexity of loss probability. We further analyze the effect of the introduction or deterioration of background risks on precautionary effort in different settings.

Original language	English
Pages (from-to)	977-983
Number of pages	7
Journal	Journal of Risk and Insurance
Volume	82
Issue number	4
Early online date	10 Jul 2014
DOIs	https://doi.org/10.1111/jori.12054
Publication status	Published - Dec 2015

Bibliographical note

This work is supported by the Fundamental Research Funds for the Central Universities under Research Project No. NR2014002, the Faculty Research Grant of Lingnan University under Research Project No. DR12A9, and Direct Grant for Research of Lingnan University under Research Project No. DR13C8.
This paper is also available at Social Science Research Network at http://ssrn.com/abstract=2445785

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10.1111/jori.12054

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author = "Jianli WANG and Jingyuan LI",

note = "This work is supported by the Fundamental Research Funds for the Central Universities under Research Project No. NR2014002, the Faculty Research Grant of Lingnan University under Research Project No. DR12A9, and Direct Grant for Research of Lingnan University under Research Project No. DR13C8. This paper is also available at Social Science Research Network at http://ssrn.com/abstract=2445785",

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AB - This paper shows that, in the temporal model of Eeckhoudt et al. (2012), prudence alone is sufficient to obtain a precautionary effort. Moreover, our conclusions relax the assumption of the convexity of loss probability. We further analyze the effect of the introduction or deterioration of background risks on precautionary effort in different settings.

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Precautionary effort : another trait for prudence

Abstract

Bibliographical note

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