Search results for: Louis Eeckhoudt

Items from 1 to 20 out of 49 results

article

Vaccination as a trade-off between risks

David Crainich, Louis Eeckhoudt, Mario Menegatti

Italian Economic Journal > 2019 > 5 > 3 > 455-472

While it reduces the probability of facing a primary (or vaccine-preventable) disease, vaccination may also introduce the risk of facing vaccine induced side effects. In this paper, we address the link between this feature of vaccination and attitudes toward risk. Risk aversion is shown to increase the propensity to vaccinate when the primary disease is lethal or when the risks of primary disease...

article

SYMPOSIUM ON CHOICES UNDER UNCERTAINTY: BEYOND RISK AVERSION

Louis Eeckhoudt, Christian Gollier

Journal of Risk and Insurance > 85 > 2 > 309 - 312

article

Average willingness to pay for disease prevention with personalized health information

David Crainich, Louis Eeckhoudt

Journal of Risk and Uncertainty > 2017 > 55 > 1 > 29-39

Personal health related information modifies individuals’ willingness to pay for disease prevention programs inasmuch as it allows health status assessment based on intrinsic (instead of average) characteristics. In this paper, we examine the effect that personalized information about the baseline probability of disease has on the average willingness to pay for programs reducing either the probability...

article

Health and portfolio choices: A diffidence approach

David Crainich, Louis Eeckhoudt, Olivier Le Courtois

European Journal of Operational Research > 2017 > 259 > 1 > 273-279

The effect of health status on portfolio decisions has been extensively studied from an empirical viewpoint. In this paper, we propose a theoretical model of individuals’ choice of financial assets under bivariate utility functions depending on wealth and health. Our approach makes an extensive use of the diffidence theorem. We establish the conditions under which the share of wealth held in risky...

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Restricted increases in risk aversion and their application

Louis Eeckhoudt, Liqun Liu, Jack Meyer

Economic Theory > 2017 > 64 > 1 > 161-181

This paper proposes additional definitions of what it means for one decision maker to be more risk averse than another. These definitions build on the strongly more risk averse definition presented by Ross (Econometrica 49:621–663, 1981). Using examples from portfolio choice, self-protection and insurance demand, it is shown that these definitions of increased risk aversion facilitate clear-cut comparative...

article

Changing risks and optimal effort

David Crainich, Louis Eeckhoudt, Mario Menegatti

Journal of Economic Behavior & Organization > 2016 > 125 > C > 97-106

Consider a decision maker who can engage in effort to increase the probability of facing a better risky situation. Intuition suggests that effort should increase when there is a greater difference between the best risky situation and the worse one. We show that this intuition is not necessarily valid and we consider the cases of risk averters and risk lovers.

article

Loss-averse preferences and portfolio choices: An extension

Louis Eeckhoudt, Anna Maria Fiori, Emanuela Rosazza Gianin

European Journal of Operational Research > 2016 > 249 > 1 > 224-230

In this paper we generalise existing models of loss-averse preferences. This extension clarifies the impact of stochastic changes in risk on the optimal degree of risk taking. Our more general model highlights an intuitive link between the literature on loss-averse behaviours and the notions of prudence and temperance recently introduced in the literature. We also stress the link between our approach...

article

Risk aversion, prudence, and asset allocation: a review and some new developments

Michel M. Denuit, Louis Eeckhoudt

Theory and Decision > 2016 > 80 > 2 > 227-243

In this paper, we consider the composition of an optimal portfolio made of two dependent risky assets. The investor is first assumed to be a risk-averse expected utility maximizer, and we recover the existing conditions under which all these investors hold at least some percentage of their portfolio in one of the assets. Then, we assume that the decision maker is not only risk-averse, but also prudent...

article

Decreasing downside risk aversion and background risk

David Crainich, Louis Eeckhoudt, Olivier Le Courtois

Journal of Mathematical Economics > 2014 > 53 > Complete > 59-63

In this paper, we show that risk vulnerability can be associated with the concept of downside risk aversion (DRA) and an assumption about its behavior, namely that it is decreasing in wealth. Specifically, decreasing downside risk aversion in the Arrow–Pratt and Ross senses are respectively necessary and sufficient for a zero-mean background risk to raise the aversion to other independent risks.

article

Risky targets and effort

O-Chia Chuang, Louis Eeckhoudt, Rachel J. Huang, Larry Y. Tzeng

Insurance Mathematics and Economics > 2013 > 52 > 3 > 465-468

When decision makers invest in effort to reach their targets, they face multiple sources of risk: first the risk of failure and second the noise that surrounds either the target or the initial situation. In this paper, we examine how effort is adjusted to account for changes in this risky environment.

article

Treatment decisions under ambiguity

Loïc Berger, Han Bleichrodt, Louis Eeckhoudt

Journal of Health Economics > 2013 > 32 > 3 > 559-569

Many health risks are ambiguous in the sense that reliable and credible information about these risks is unavailable. In health economics, ambiguity is usually handled through sensitivity analysis, which implicitly assumes that people are neutral towards ambiguity. However, empirical evidence suggests that people are averse to ambiguity and react strongly to it. This paper studies the effects of ambiguity...

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When Ross meets Bell: The linex utility function

Michel M. Denuit, Louis Eeckhoudt, Harris Schlesinger

Journal of Mathematical Economics > 2013 > 49 > 2 > 177-182

At first glance, there would appear to be no relationship between Bell’s (1988) concept of one-switch utility functions and that of a stronger measure of risk aversion due to Ross (1981). We show however that specific assumptions about the behavior of the stronger measure of risk aversion also give rise to the linex utility function which belongs to the class of one-switch utility functions. In particular,...

article

Improving your chances: A new result

Michel M. Denuit, Louis Eeckhoudt

Economics Letters > 2013 > 118 > 3 > 475-477

In this letter, we show that the results presented by Jindapon and Neilson (2007) for changes in risk à la Ekern (1980) can be generalized to mean-preserving stochastic dominance changes, with appropriate and simple additional conditions on the utility function.

article

On insuring and caring for parents’ long-term care needs

Christophe Courbage, Louis Eeckhoudt

Journal of Health Economics > 2012 > 31 > 6 > 842-850

When adult children are financially responsible for their parents, they can take considerable interest in the amount of their parents’ long-term care (LTC) insurance. In this paper, we look at the optimal levels of LTC insurance and of informal care, and at the link between these two decisions when the child, who provides informal care, is also the decision-maker with regard to LTC insurance. Interestingly,...

article

Precautionary Effort: A New Look

Louis Eeckhoudt, Rachel J. Huang, Larry Y. Tzeng

Journal of Risk and Insurance > 79 > 2 > 585 - 590

While the concept of precautionary saving is well documented, that of precautionary effort has received relatively limited attention. In this note, we set up a two period model in order to analyze the conditions under which the introduction (or deterioration) of an independent background risk increases effort.

article

On relative and partial risk attitudes: theory and implications

W. Henry Chiu, Louis Eeckhoudt, Beatrice Rey

Economic Theory > 2012 > 50 > 1 > 151-167

This paper develops context-free interpretations for the relative and partial Nth degree risk attitude measures and show that various conditions on theses measures are utility characterizations of the effects of scaling general stochastic changes in different settings. It is then shown that these characterizations can be applied to generalize comparative statics results in a number of important problems,...

article

Correlated risks, bivariate utility and optimal choices

Michel M. Denuit, Louis Eeckhoudt, Mario Menegatti

Economic Theory > 2011 > 46 > 1 > 39-54

In this paper, we consider a decision-maker facing a financial risk flanked by a non-financial background risk such as health or environmental risk. A decision has to be made about the amount of an investment (in the financial dimension) resulting in a future benefit either in the same dimension (savings) or in the other dimension (environmental quality or health improvement). In this framework, we...

article

Correlated risks and the value of information

Louis Eeckhoudt, Alban Thomas, Nicolas Treich

Journal of Economics > 2011 > 102 > 1 > 77-87

A decision maker faces two correlated risks and can obtain information on only one of them. Intuition suggests that the existence of a high correlation (in absolute value) between the risks should increase total information value. Indeed in such a case information about one risk induces a relevant information on the other one. Using a simple example, we show that this intuition is often correct, but...

article

Risk vulnerability: a graphical interpretation

Louis Eeckhoudt, Béatrice Rey

Theory and Decision > 2011 > 71 > 2 > 227-234

The article gives a graphical interpretation of the concept of risk vulnerability. It shows that in a specific context of binary lotteries the assumption of risk vulnerability adds to prudence what the assumption of decreasing absolute risk aversion adds to risk aversion. We end the presentation showing that results can be extended to the concept of multiplicative risk vulnerability.

article

Stronger measures of higher-order risk attitudes

Michel M. Denuit, Louis Eeckhoudt

Journal of Economic Theory > 2010 > 145 > 5 > 2027-2036

This paper aims to extend the results by Ross (1981) [15] and by Modica and Scarsini (2005) [13] to stochastic dominance of degree 4 and over. Specifically, it is shown that Ross' approach can be extended to any order of risk attitude beyond the generalization proposed by Modica and Scarsini by means of sth degree increase in risk defined by Ekern (1980) [8].

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Search results for: Louis Eeckhoudt

Vaccination as a trade-off between risks

SYMPOSIUM ON CHOICES UNDER UNCERTAINTY: BEYOND RISK AVERSION

Average willingness to pay for disease prevention with personalized health information

Health and portfolio choices: A diffidence approach

Restricted increases in risk aversion and their application

Changing risks and optimal effort

Loss-averse preferences and portfolio choices: An extension

Risk aversion, prudence, and asset allocation: a review and some new developments

Decreasing downside risk aversion and background risk

Risky targets and effort

Treatment decisions under ambiguity

When Ross meets Bell: The linex utility function

Improving your chances: A new result

On insuring and caring for parents’ long-term care needs

Precautionary Effort: A New Look

On relative and partial risk attitudes: theory and implications

Correlated risks, bivariate utility and optimal choices

Correlated risks and the value of information

Risk vulnerability: a graphical interpretation

Stronger measures of higher-order risk attitudes

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