Self-Protection in the Expected-Utility-of-Wealth Model: An Impossibility Theorem
We investigate the possibility of ordering expected utility-of-wealth maximizers according to their propensities to purchase self-protection. We define one agent as "more cautious" than another (toward a loss of specific size given a specific initial wealth) if the first agent would spend...
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| Published in | The Geneva Papers on Risk and Insurance Theory Vol. 17; no. 2; pp. 147 - 157 |
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| Main Authors | , |
| Format | Journal Article |
| Language | English |
| Published |
Boston
Kluwer Academic Publishers
01.12.1992
Palgrave Macmillan |
| Series | The Geneva Risk and Insurance Review |
| Subjects | |
| Online Access | Get full text |
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| Abstract | We investigate the possibility of ordering expected utility-of-wealth maximizers according to their propensities to purchase self-protection. We define one agent as "more cautious" than another (toward a loss of specific size given a specific initial wealth) if the first agent would spend more on self-protection than the other, so long as the technological relationship between spending and loss probability belongs to a broad class of functions. We show that the expected-utility-of-wealth model does not allow for the possibility that one agent could be "more cautious" than another. |
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| AbstractList | We investigate the possibility of ordering expected utility-of-wealth maximizers according to their propensities to purchase self-protection. We define one agent as "more cautious" than another (toward a loss of specific size given a specific initial wealth) if the first agent would spend more on self-protection than the other, so long as the technological relationship between spending and loss probability belongs to a broad class of functions. We show that the expected-utility-of-wealth model does not allow for the possibility that one agent could be "more cautious" than another. We investigate the possibility of ordering expected utility-of-wealth maximizers according to their propensities to purchase self-protection. We define one agent as “more cautious†than another (toward a loss of specific size given a specific initial wealth) if the first agent would spend more on self-protection than the other, so long- as the technological relationship between spending and loss probability belongs to a broad class of functions. We show that the expected-utility-of-wealth model does not allow for the possibility that one agent could be “more cautious†than another. The Geneva Papers on Risk and Insurance Theory (1992) 17, 147–158. doi:10.1007/BF00962711 We investigate the possibility of ordering expected utility-of-wealth maximizers according to their propensities to purchase self-protection. We define one agent as "more cautious" than another (toward a loss of specific size given a specific initial wealth) if the first agent would spend more on self-protection than the other, so long- as the technological relationship between spending and loss probability belongs to a broad class of functions. We show that the expected-utility-of-wealth model does not allow for the possibility that one agent could be "more cautious" than another. [PUBLICATION ABSTRACT] |
| Author | BEARD, T. RANDOLPH SWEENEY, GEORGE |
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| Snippet | We investigate the possibility of ordering expected utility-of-wealth maximizers according to their propensities to purchase self-protection. We define one... |
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| SubjectTerms | Economic models Economic theory Expected utility Insurance markets Probability distributions Risk Risk aversion Risk aversion preference Self insurance Spending Wealth |
| Title | Self-Protection in the Expected-Utility-of-Wealth Model: An Impossibility Theorem |
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