Analysing the US Panel Study of Income Dynamics, we present a new empirical method to investigate the extent to which households reduce their financial risk exposure when confronted with background risk. Our novel modelling approach - termed a deflated fractional ordered probit model -...

This paper studies the decision problem of risk averse single-output producers and suppliers under uncertainties in input prices, in a two-moment decision model with the presence of a dependent background risk. This framework is based on the utility from the expected value and the standard...

Decisions involving risk are usually taken in the presence of other insurable or non-insurable risks, the latter type called background risk. We examine how changing background risk influences risk-taking based on panel data with monthly observations from Senegalese fishermen. Fishing income is...