In this paper, we show how a differentiated tax treatment of corporate losses and corporate profits induces the firm to behave in a very specific risk-averse manner.

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 fall. We show that these conditions neither imply,...

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.

The effects of risk and risk aversion in the single-period inventory ("newsboy") problem are examined. Comparative-static effects of changes in the various price and cost parameters are determined and related to the newsboy's risk aversion. The addition of a random background wealth and of an...