Optimal prevention and prudence in a two-period model

This work shows that, in a two-period framework, prudence has a positive effect on optimal prevention. This conclusion is the opposite to that obtained in a one-period framework [Eeckhoudt L., Gollier C., 2005. The impact of prudence on optimal prevention. Economic Theory 26, 989-994]. This is due to the opposite effect of prevention on wealth in the period where the risk occurs.

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Year of publication:	2009
Authors:	Menegatti, Mario
Published in:	Mathematical Social Sciences. - Elsevier, ISSN 0165-4896. - Vol. 58.2009, 3, p. 393-397
Publisher:	Elsevier
Subject:	Prevention Prudence Risk

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008521262