We show how optimal saving in a two-period model is affected when prudence and risk aversion of the underlying utility … function change. Increasing prudence alone will induce higher savings only if, for certain combinations of the interest rate … and the pure time discount rate, there is distributional neutrality between the two periods. Otherwise, changes of risk …

investor to hold out. This model shows that the investment decision is based on the portfolio structure, risk aversion and …

role of learning and risk aversion. It bridges two strands of literature: one focused on the role learning for the success … of IEA formation when countries are risk neutral and another that explores the implications of uncertainty and risk … aversion on IEA formation under no learning. Combining learning and risk aversion seems appropriate as the uncertainties …

Common integrated assessment models produce the counterintuitive result that higher risk aversion does not lead to …. The simulations show that aversion to this tipping point risk has little effect. For climate sensitivity of realistic …

assumption of (intertemporal) risk neutrality reduces the growth effect in social discounting and significantly amplifies the … importance of risk and correlation. Second, debate and models largely overlook the difference in attitude with respect to risk … and with respect to non-risk uncertainty. The paper derives the resulting changes of the risk-free and the stochastic …

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 …

We examine the combined effects of asymmetric taxation and limited liability on optimal risk taking of investors. Given … an optimal risk level in the pre-tax case under full liability, loss-offset restrictions reduce, and limited liability … enhances the incentives for taking risk. For every degree of limited liability we can find corresponding loss …

of years spent in retirement” are characterized by constant or decreasing absolute risk aversion. A similar result …

a richer risk attitude than that captured in the standard discounted expected utility model. I derive three models that … permit a more comprehensive risk evaluation. These preference representations differ regarding the consistency requirements … will yield quite different policy implications than the discounted expected utility model based on pure time preference …