On the relationship between absolute prudence and absolute risk aversion

This paper shows how, under a few standard assumptions on the utility function, the monotonicity of absolute risk aversion (ARA) and of absolute prudence (AP) are connected. We get some general Propositions on the behaviour of the two functions regarding the positions and the number of their critical points. We also examine some cases where the shape of ap allows to completely determine that of ARA.

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Year of publication:	2003
Authors:	Maggi, M. A. ; Magnani, U. ; Menegatti, M.
Institutions:	Facoltà di Economia, Università degli Studi di Parma
Subject:	absolute risk aversion \| absolute prudence \| precautionary saving

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Series:	Economics Department Working Papers.
Type of publication:	Book / Working Paper
Notes:	Number 2003-EP04 12 pages
Classification:	D11 - Consumer Economics: Theory ; D81 - Criteria for Decision-Making under Risk and Uncertainty ; E21 - Consumption; Saving
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005248549