The Income Effect under Uncertainty: a Slutsky-Like Decomposition with Risk Aversion

Elena Antoniadou, Leonard Mirman and Marc Santugini

Cahiers de recherche from CIRPEE

Abstract: We study the effect of changing income on optimal decisions in the multidimensional expected utility framework with strongly separable preferences. Using the Kihlstrom and Mirman (1974) (KM) utility representation, we show that the effect of changing income can be decomposed into a modified income effect linked to the classical income effect and an effect representing attitudes to risk, modified by income.

Keywords: Classical Demand Theory; Consumption-Saving Problem; Income; Risk Aversion; Uncertainty (search for similar items in EconPapers)
JEL-codes: D01 D81 D91 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.cirpee.org/fileadmin/documents/Cahiers_2013/CIRPEE13-06.pdf (application/pdf)

Related works:
Journal Article: The income effect under uncertainty: A Slutsky-like decomposition with risk aversion (2016)
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:lvl:lacicr:1306

Access Statistics for this paper

More papers in Cahiers de recherche from CIRPEE Contact information at EDIRC.
Bibliographic data for series maintained by Manuel Paradis ().