Full-text VersionAccepted Author Manuscript
The impact of prudence on optimal prevention revisitedEconomics Letters
Document TypeJournal article
- absolute prudence,
AbstractWe 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.
Copyright © 2011 Elsevier B.V.
Access to external full text or publisher's version may require subscription.
Additional InformationThis paper is also available at the Social Science Research Network at http://ssrn.com/abstract=1639539.
Citation InformationDionne, 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