Precautionary effort : another trait for prudence

Jianli WANG, Jingyuan LI

Research output: Journal PublicationsJournal Article (refereed)

16 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 languageEnglish
Pages (from-to)977-983
Number of pages7
JournalJournal of Risk and Insurance
Volume82
Issue number4
Early online date10 Jul 2014
DOIs
Publication statusPublished - 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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