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On temperance and risk spreading

Christophe Courbage () and Béatrice Rey
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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: 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)
Date: 2020
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DOI: 10.1007/s11238-019-09737-0

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