This paper shows that, in the temporal model of Eeckhoudt et al. (2012), prudence alone is sufficient to obtain a precautionary effort. Moreover, our conclusions relax the assumption of the convexity of loss probability. We further analyze the effect of the introduction or deterioration of...

We define decreasing higher-degree Ross risk aversion and provide an intuitive interpretation for it. We show that all deteriorations of background risk in the sense of n-th risk increase raise risk aversion in the Arrow-Pratt sense if and only if decreasing (n 1)-th degree Ross risk aversion...

This paper examines precautionary paying motive for stochastic improvements with a decision maker who is ambiguous about the future risk that she will face and whose preferences are represented by a generalized two-period smooth ambiguity model that separates risk, ambiguity and time...

This paper re-investigates the utility premium of Friedman-Savage (1948). We show that monotone comparative statics predictions under changes in risk are assured by strictly decreasing utility premium alone. Applications to the demand for precautionary saving, the precautionary effort and the...

This work examines the relationships between higher-order risk aversion attitudes. We illustrate the meaning of "bounded marginal utility" in the whole real-value space. Under this assumption, we further demonstrate that prudence can not only imply risk aversion, but also risk seeking; and we...

This paper studies the effects of ambiguity aversion and ambiguity on optimal decisions, which must be taken in advance at a point when the future state of the world is ambiguous. Holding risk preferences, beliefs, and time preferences fixed, we use lattice-based monotone comparative statics to...

In this paper, we study two classical saving-insurance problems for the intertemporal version developed by Hayashi and Miao (2011) of the smooth ambiguity model of Klibanoff et al. (2005). These models put risk, ambiguity and time preferences together in a Kreps-Porteus aggregator, and...