from the exciting new field of behavioral economics. …

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 … 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. …

Lorenz dominance is characterized by this property and discuss the implications of these results for choice under risk. …

We examine asset prices in a representative-agent model of general equilibrium. Assuming only that individuals are risk … averse, we determine conditions on the changes in asset risk that are both necessary and sufficient for the asset price to … incomplete in the sense of containing an uninsurable background risk, such as a risk on labor income. We extend our model to show …

representative agent is prudent (u ' > 0), because of the increased risk that it yields for the distant future. A similar definition …-Ingersoll-Ross model, with the opposite comparative static property holding under temperance (u ' < 0), because the change in downside risk …

We use perturbation methods to derive a rule for the optimal risk-adjusted social cost of carbon (SCC) that … different aversions to risk and intertemporal fluctuations, convex damages, uncertainties in economic growth, atmospheric carbon …-run climate feedbacks. Our non-certainty-equivalent rule for the SCC incorporates precaution, risk insurance, and climate …

this uncertainty cost? Is there a hedging strategy that decision makers can adopt to cope with delayed action and uncertain … costs of ambitious climate policies. They also indicate that there is an effective hedging strategy that could minimise the …

empirical strategy to test whether oligopolistic firms use forward contracts for strategic motives, for risk-hedging, or for … both. An increase in the number of players weakens the incentives to sell forward for risk-hedging reasons. However, if …Building on a model of the interaction of risk-averse firms that compete in forward and spot markets, we develop an …