The impact of prudence on optimal prevention revisited

Georges DIONNE; Jingyuan LI

doi:10.1016/j.econlet.2011.06.019

The impact of prudence on optimal prevention revisited

Georges DIONNE, Jingyuan LI

Department of Finance and Insurance

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

26 Citations (Scopus)

Abstract

We re-examine the link between absolute prudence and self-protection activities. We show that the level of effort chosen by an agent with decreasing absolute prudence is larger than the optimal effort chosen by a risk-neutral agent if the degree of absolute prudence is less than a threshold that is utility-independent and empirically verifiable.

Original language	English
Pages (from-to)	147-149
Number of pages	3
Journal	Economics Letters
Volume	113
Issue number	2
DOIs	https://doi.org/10.1016/j.econlet.2011.06.019
Publication status	Published - 1 Nov 2011

Bibliographical note

This paper is also available at the Social Science Research Network at http://ssrn.com/abstract=1639539.

Keywords

Skewness
absolute prudence
self-protection

Access to Document

10.1016/j.econlet.2011.06.019

Cite this

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KW - self-protection

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The impact of prudence on optimal prevention revisited

Abstract

Bibliographical note

Keywords

Access to Document

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Cite this