Risk Aversion, Prudence and Temperance: A Unified Approach

Louis Eeckhoudt, Christian Gollier () and Thierry Schneider

Working Papers from Risk and Insurance Archive

Abstract: Risk aversion can be defined either by the negative sign of the second derivative of the utility function or by the rejection of any mean-preserving increase in risk. The more recent notions of prudence and temperance have so far been defined exclusively by the sign of the third and the fourth derivative of the utility function. In this paper we show that, as risk aversion, prudence and temperance can also be interpreted as systematic attitudes towards transformation of a density function.

Keywords: risk aversion; prudence; temperance. (search for similar items in EconPapers)
Date: 1994-07
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Journal Article: Risk-aversion, prudence and temperance: A unified approach (1995)
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