The Impact of Ambiguity Prudence on Insurance and Prevention

Loïc Berger

Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: This paper derives simple and plausible conditions under which ambiguityaversion raises the demand for (self-) insurance and self-protection when theeffort is furnished one period before the realization of the uncertainty. Unlikethe recent contribution made by [Alary D. Gollier C. Treich N. 2013. Theeffect of ambiguity aversion on insurance and self-protection. The EconomicJournal], I show that in the most usual situations in which the level of ambiguitydoes not increase with the level of effort, a clear and positive answer canbe given to the question: Does ambiguity aversion raise the level of effort?

Keywords: non-expected utility; self protection; self insurance; ambiguity; prudence (search for similar items in EconPapers)
JEL-codes: D61 D81 D91 G11 (search for similar items in EconPapers)
Pages: 20 p.
Date: 2014-02
New Economics Papers: this item is included in nep-ias and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: The Impact of Ambiguity Prudence on Insurance and Prevention (2015)
Working Paper: The Impact of Ambiguity Prudence on Insurance and Prevention (2015)
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