Optimal prevention and prudence in a two-period model

Mario Menegatti

Mathematical Social Sciences, 2009, vol. 58, issue 3, 393-397

Abstract: This work shows that, in a two-period framework, prudence has a positive effect on optimal prevention. This conclusion is the opposite to that obtained in a one-period framework [Eeckhoudt L., Gollier C., 2005. The impact of prudence on optimal prevention. Economic Theory 26, 989-994]. This is due to the opposite effect of prevention on wealth in the period where the risk occurs.

Keywords: Prevention; Prudence; Risk (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (66)

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Working Paper: Optimal prevention and prudence in a two-period model (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:58:y:2009:i:3:p:393-397

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