Consider an agent facing a risky distribution of losses who can change this distribution by exerting some effort. Should be exert more effort when he becomes more risk-averse? For instance, should we expect more risk-averse drivers to drive more cautiously? In this paper, we give sufficient...

In addition to showing the connection between parallel contingent and noncontingent risk comparison problems, we articulate a method for solving both kinds of problems using the "basis" approach. The basis approach has often been used implicitly, but we argue that there is value to making its...

In this paper, we compare the attitude towards current risk of two expected-utility-maximizing investors that are identical except that the first investor will live longer than the second one.

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 analyze risk sensitive incentive compatible deposit insurance in the presence of private information when the market value of deposit insurance can be determined using Merton's (1977, 3-11) formula.

We consider the problem of the optimal use of a good whose consumption can produce damages in the future. Potential damages are proportional to the accumulated lifetimeconsumption of the good. Scientific progress is made over time that provides information on the distribution of the intensity of...

We consider an economy with a complete set of competitive markets for contingent claims. We examine how wealth inequality affects the equilibrium value of the equity premium and the risk-free rate. We forst show that welath inequality raises the equity premium if and only if the inverse of...

We examine in this paper the effect of an early resolution of uncertainty on savings. We show that this effect is in general ambiguous. We provide necessary and sufficient conditions on the utility function which guarantee that an early resolution of uncertainty reduces current savings for...