Putting Risk in Its Proper Place

Louis Eeckhoudt and Harris Schlesinger

American Economic Review, 2006, vol. 96, issue 1, 280-289

Abstract: This paper examines preferences toward particular classes of lottery pairs. We show how such concepts as prudence and temperance can be fully characterized by a preference relation over these lotteries. If preferences are defined in an expected-utility framework with differentiable utility, the direction of preference for a particular class of lottery pairs is equivalent to signing the nth derivative of the utility function. What makes our characterization appealing is its simplicity, which seems particularly amenable to experimentation.

Date: 2006
Note: DOI: 10.1257/000282806776157777
References: Add references at CitEc
Citations: View citations in EconPapers (412)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/000282806776157777 (application/pdf)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Putting risk in its proper place (2006)
Working Paper: Putting risk in its proper place (2006)
Working Paper: Putting Risk in its Proper Place (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:aea:aecrev:v:96:y:2006:i:1:p:280-289

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().