How does risk affect saving? Empirical work typically examines the effects of detectible differences in risk within the … data. How these differences affect saving in theoretical models depends on the metric one uses for risk. For labor …-income risk, second-degree increases in risk require prudence to induce increased saving demand. However, prudence is not …

Consider a simple two-state risk with equal probabilities for the two states. In particular, assume that the random … this way, we can extend and generalize existing results about risk attitudes. This lottery preference includes behavior … exhibiting higher order risk effects, such as precautionary effects and tempering effects. …

Due to opaque information and weak enforcement in emerging loan markets, the need for collateral is high, whereas … borrowers lack adequate assets to pledge as collateral. How is this puzzle solved? We find for a representative sample from … Northeast Thailand that indeed most loans do not include any tangible assets as collateral. Instead, lenders enforce collateral …

’ understanding of the possible circumstances in which actions will have to be chosen and their attitude towards risk and uncertainty … risk aversion, the higher the agency costs for delegation and hence the less profitable is a flexible contract versus a …

compared in terms of efficiency and power to discriminate between low and high risk clients by employing data from a new …

about bank asset risk. The regulator can either (1) make bank capital requirements contingent on credit ratings; or (2) set … constrain high risk bank investment without simultaneously reducing overall investment volume. However, if collusion between the …

explore the design of policy. The model highlights the critical roles played by (i) the relationship between behavioural risk … preferences, standard risk aversion and labour supply behaviour, (ii) the risk properties of education, and (iii) the degree of …