Willingness to Pay for Risk Reduction and Risk Aversion without the Expected Utility Assumption

By means of minimal assumptions on the individual preferences, I show that the Willingness To Pay (WTP) for both a FSD and SSD reduction of risk is the sum of a mean effect, a pure risk effect and a wealth effect. As a result, the WTP of a risk-averse decision maker may be lower than the WTP of a risk-neutral one, for a large class of individual preferencesâ€™ representation and a large class of risks. Copyright Springer 2005

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Year of publication:	2005
Authors:	Langlais, Eric
Published in:	Theory and Decision. - Springer. - Vol. 59.2005, 1, p. 43-50
Publisher:	Springer
Subject:	Risk premium \| willingness to pay \| first and second stochastic dominance shifts in risk

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005678341