Safety, in Numbers

Marilyn Pease and Mark Whitmeyer

Papers from arXiv.org

Abstract: We introduce a way to compare actions in decision problems. An action is safer than another if the set of beliefs at which the decision-maker prefers the safer action increases in size (in the set inclusion sense) as the decision-maker becomes more risk averse. We provide a full characterization of this relation and show that it is equivalent to a robust concept of single-crossing. We discuss applications to investment hedging, security design, and game theory.

Date: 2023-10, Revised 2024-02
New Economics Papers: this item is included in nep-gth, nep-mic and nep-rmg
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