On temperance and risk spreading
Christophe Courbage () and
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Christophe Courbage: University of Applied Sciences Western Swizterland (HES-SO)
Béatrice Rey: Université Lumière Lyon 2
Theory and Decision, 2020, vol. 88, issue 4, No 4, 527-539
Abstract This paper shows that temperance is the highest order risk preference condition for which spreading N independent and unfair risks provides the highest level of welfare than any other possible allocations of risks. These results are also interpreted through the concept of N-superadditivity of the utility premium. This paper provides a novel application of temperance, not in terms of two risks as it is common, but in terms of N risks.
Keywords: Temperance; Risk spreading; Superadditivity; Utility premium (search for similar items in EconPapers)
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