Document Type

Journal article

Source Publication

Economics Letters

Publication Date

11-1-2011

Volume

113

Issue

2

First Page

147

Last Page

149

Keywords

absolute prudence, self-protection, Skewness

Abstract

We re-examine the link between absolute prudence and self-protection activities. We show that the level of effort chosen by an agent with decreasing absolute prudence is larger than the optimal effort chosen by a risk-neutral agent if the degree of absolute prudence is less than a threshold that is utility-independent and empirically verifiable.

DOI

10.1016/j.econlet.2011.06.019

Print ISSN

01651765

E-ISSN

18737374

Publisher Statement

Copyright © 2011 Elsevier B.V.

Access to external full text or publisher's version may require subscription.

Additional Information

This paper is also available at the Social Science Research Network at http://ssrn.com/abstract=1639539.

Full-text Version

Accepted Author Manuscript

Recommended Citation

Dionne, G., & Li, J. (2011). The impact of prudence on optimal prevention revisited. Economics Letters, 113(2), 147-149. doi: 10.1016/j.econlet.2011.06.019