Willingness to Pay for Risk Reduction and Risk Aversion without the Expected Utility Assumption

Eric Langlais

Theory and Decision, 2005, vol. 59, issue 1, 43-50

Abstract: By means of minimal assumptions on the individual preferences, I show that the Willingness To Pay (WTP) for both a FSD and SSD reduction of risk is the sum of a mean effect, a pure risk effect and a wealth effect. As a result, the WTP of a risk-averse decision maker may be lower than the WTP of a risk-neutral one, for a large class of individual preferences’ representation and a large class of risks. Copyright Springer 2005

Keywords: Risk premium; willingness to pay; first and second stochastic dominance shifts in risk (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://hdl.handle.net/10.1007/s11238-005-7303-9 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Willingness to Pay for Risk Reduction and Risk Aversion without the Expected Utility Assumption (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:theord:v:59:y:2005:i:1:p:43-50

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/11238/PS2

DOI: 10.1007/s11238-005-7303-9

Access Statistics for this article

Theory and Decision is currently edited by Mohammed Abdellaoui

More articles in Theory and Decision from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().