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Article
The impact of prudence on optimal prevention revisited
Economics Letters
  • Georges DIONNE
  • Jingyuan LI, Lingnan University, Hong Kong
Document Type
Journal article
Publication Date
11-1-2011
Keywords
  • absolute prudence,
  • self-protection,
  • Skewness
Disciplines
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
E-ISSN
18737374
Publisher Statement

Copyright © 2011 Elsevier B.V.

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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
Citation Information
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