This work shows that in a two-period framework, prudence has an increasing effect on optimal prevention. This conclusion is the opposite to that obtained in a one-period framework [Eeckhoudt and Gollier, Economic Theory 26 (2005), 989-994]. This is due to the opposite effect of prevention on...

This work makes a joint analysis of prevention and saving decisions. First we determine the optimal levels of the two variables and we analyze substitution between them. Second we provide some comparative statics results in order to determine the effects on optimal saving and prevention of...