Greater Mutual Aggravation

Sebastian Ebert, Diego Nocetti and Harris Schlesinger

Management Science, 2018, vol. 64, issue 6, 2809-2811

Abstract: A large strand of research has identified when (i) a single risk is undesirable and (ii) two independent risks aggravate each other. We extend this line of inquiry by establishing when (iii) mutual aggravation is greater for greater risks. This natural property of greater mutual aggravation explains recent experimental findings on higher-order risk preferences, and can guide managerial behavior when risks in the decision environment become more severe.

Keywords: mixed risk aversion; mutual aggravation; risk apportionment; stochastic dominance; utility premium; prudence (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (12)

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https://doi.org/10.287/mnsc.2017.2746 (application/pdf)

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Working Paper: Greater Mutual Aggravation (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:64:y:2018:i:6:p:2809-2811

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