Even (Mixed) Risk Lovers Are Prudent
- (pp. 1529-35)
Abstract
The purpose of this note is to analyze properties of the risk lovers’ utility function beyond the positive sign of its second order derivative. We show that––contrarily to a priori beliefs––risk lovers are prudent and are willing to accumulate precautionary savings.Citation
Crainich, David, Louis Eeckhoudt, and Alain Trannoy. 2013. "Even (Mixed) Risk Lovers Are Prudent." American Economic Review, 103 (4): 1529-35. DOI: 10.1257/aer.103.4.1529JEL Classification
- D81 Criteria for Decision-Making under Risk and Uncertainty