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Putting Risk in its Proper Place
This paper examines preferences toward particular classes of lottery pairs. We show how such concepts as prudence and temperance can be fully characterized by a preference relation over theseExpand
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The Risk-Averse and Prudent Newsboy
The effects of risk and risk aversion in the single-period inventory "newsboy" problem are examined. Comparative-static effects of changes in the various price and cost parameters are determined andExpand
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A Good Sign for Multivariate Risk Taking
TLDR
We provide an equivalence between the signs of these cross derivatives and individual preference within a particular class of simple lotteries. Expand
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Exploring Higher-Order Risk Effects
Higher-order risk effects play an important role in examining economic behavior under uncertainty. A precautionary demand for saving has been linked to the property of prudence and the property ofExpand
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Rational Insurance Purchasing: Consideration of Contract Nonperformance
Much of the analysis of rational insurance purchasing and hedging strategies has been undertaken on the basis of the expected utility hypothesis. This decision framework has been used to reformulateExpand
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Optimal Insurance in Incomplete Markets
This paper examines the theory of optimal insurance purchasing in the presence of uninsurable background risk. Existing theorems concerning the optimal level of insurance and the optimal form of anExpand
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Risk Aversion and the Propensities for Self-Insurance and Self-Protection
For a risk-averse individual, the methods for reducing the expected financial impact of a loss include reducing the severity of any loss that occurs (self-insurance) and reducing the probability ofExpand
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Consistency of Higher Order Risk Preferences
Risk aversion (a 2nd order risk preference) is a time-proven concept in economic models of choice under risk. More recently, the higher order risk preferences of prudence (3rd order) and temperanceExpand
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Changes in Risk and the Demand for Saving
How does risk affect saving? Empirical work typically examines the effects of detectible differences in risk within the data. How these differences affect saving in theoretical models depends on theExpand
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Apportioning of Risks via Stochastic Dominance
TLDR
We show that a decision maker exhibiting (N + M)th-order stochastic dominance preference will allocate the state-contingent lotteries in such a way as not to group the two "bad" lotters in the same state. Expand
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