Consumption, Commitmants and Preferences for Risk
Andrew Postlewaite,
Larry Samuelson and
Dan Silverman
No 10527, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
We examine an economy in which the cost of consuming some goods can be reduced by making commitments to consumption levels independent of the state. For example, it is cheaper to produce housing services via owner-occupied than rented housing, but the transactions costs associated with the former prompt relatively inflexible housing consumption paths. We show that consumption commitments can cause risk-neutral consumers to care about risk, creating incentives to both insure risks and bunch uninsured risks together. For example, workers may prefer to avoid wage risk while bearing an unemployment risk that is concentrated in as few states as possible.
JEL-codes: D21 D31 (search for similar items in EconPapers)
Date: 2004-05
New Economics Papers: this item is included in nep-mic and nep-reg
Note: EFG LS
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
http://www.nber.org/papers/w10527.pdf (application/pdf)
Related works:
Working Paper: Consumption commitments and preferences for risk (2004) 
Working Paper: Consumption Commitments and Preferences for Risk (2004)
Working Paper: Consumption Commitments and Preferences for Risk (2004) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:10527
Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w10527
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().