Precautionary effort : another trait for prudence
Document Type
Journal article
Source Publication
Journal of Risk and Insurance
Publication Date
12-2015
Volume
82
Issue
4
First Page
977
Last Page
983
Publisher
Wiley-Blackwell Publishing, Inc.
Keywords
Prudence, Precautionary effort, Background risks
Abstract
This paper shows that, in the temporal model of Eeckhoudt et al. (2012), prudence alone is sufficient to obtain a precautionary effort. Moreover, our conclusions relax the assumption of the convexity of loss probability. We further analyze the effect of the introduction or deterioration of background risks on precautionary effort in different settings.
DOI
10.1111/jori.12054
Print ISSN
00224367
E-ISSN
15396975
Funding Information
This work is supported by the Fundamental Research Funds for the Central Universities under Research Project No. NR2014002, the Faculty Research Grant of Lingnan University under Research Project No. DR12A9, and Direct Grant for Research of Lingnan University under ResearchProject No. DR13C8. {NR2014002, DR12A9, DR13C8}
Publisher Statement
Copyright © The Journal of Risk and Insurance, 2014
Access to external full text or publisher's version may require subscription.
Additional Information
This paper is also available at Social Science Research Network at http://ssrn.com/abstract=2445785
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Wang, J., & Li, J. (2014). Precautionary effort: Another trait for prudence. Journal of Risk and Insurance, 82(4), 977-983. doi: 10.1111/jori.12054