Economics at your fingertips  

The probability premium: A graphical representation

Louis Eeckhoudt and Roger Laeven ()

Economics Letters, 2015, vol. 136, issue C, 39-41

Abstract: We illustrate that Pratt’s probability premium can be given a simple graphical representation allowing a direct comparison to the equivalent but more prevalent concept of risk premium under expected utility. We also show that the probability premium’s graphical representation under the dual theory mimics that of the risk premium under expected utility.

Keywords: Risk premium; Probability premium; Expected utility; Dual theory; Risk aversion (search for similar items in EconPapers)
JEL-codes: D81 G10 G20 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
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:

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-04-02
Handle: RePEc:eee:ecolet:v:136:y:2015:i:c:p:39-41