Which Shape for the Cost Curve of Risk?

Louis Eeckhoudt and Christian Gollier ()

Working Papers from Toulouse - GREMAQ

Abstract: It is often suggested that the larger the size of risk, the larger our willingness to pay (WTP) for a given reduction of this risk. We show that this is not true in general in the expected utility model. We examine under which conditions the WTP for a marginal reduction in the size of risk is increasing. We also examine the closely related question of whether the risk premium is superadditive in the size of risk.

Keywords: RISK (search for similar items in EconPapers)
JEL-codes: D81 D83 (search for similar items in EconPapers)
Pages: 19 pages
Date: 1998
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Citations: View citations in EconPapers (9)

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Working Paper: Which shape for the cost curve of risk? (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:gremaq:98.490

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