We provide a new proof for the optimality of deductible insurance that does not depend on the expected-utility hypothesis. Our model uses only first- and second-degree stochastic dominance arguments.

What are the determinants of the optimal level of effort to reduce the probability of a loss to occur? Whereas most of the literature on this question focused on risk aversion, we show that the concept of prudence (i.e., a positive third derivative of the utility function) is essential to answer...

We provide a new proof for the optimality of deductible insurance that does not depend on the expected-utility hypothesis. Our model uses only first- and second-degree stochastic dominance arguments. <!--ID="" Correspondence to: C. Gollier -->

<Para ID="Par1">We examine the characteristics of the optimal insurance contract under linear transaction costs and an ambiguous distribution of losses. Under the standard expected utility model, we know from Arrow (<CitationRef CitationID="CR3">1965</CitationRef>) that it contains a straight deductible. In this paper, we assume that the policyholder is...</citationref></para>