Springer Nature is making SARS-CoV-2 and COVID-19 research free. View research | View latest news | Sign up for updates

Left-Side strong increases in risk and their comparative statics

  • 51 Accesses

  • 3 Citations

Abstract

This paper introduces a new concept of left-side strong increases in risk (L-SIR) that extends the definition of strong increases in risk (SIR). We also provide somewhat stronger restrictive set of risk-averse decision-makers with a non-negative third derivative utility (prudence) to obtain an appealing comparative statics result for L-SIR.

This is a preview of subscription content, log in to check access.

References

  1. J.M. Black G. Bulkley (1989) ArticleTitleA ratio criterion for signing the effect of an increase in uncertainty International Economic Review 30 119–130

  2. G. Dionne L. Eeckhoudt C. Gollier (1993a) ArticleTitleIncreases in risk and linear payoffs International Economic Review 34 309–319

  3. G. Dionne L. Eeckhoudt C. Gollier (1993b) ArticleTitleRelatively weak increases in risk and their comparative statics Economics Letters 41 269–272

  4. L. Eeckhoudt C. Gollier (1995) ArticleTitleDemand for risky assets and the monotone probability ratio order Journal of Risk and Uncertainty 11 113–122

  5. L. Eeckhoudt C. Gollier H. Schlesinger (1996) ArticleTitleChanges in background risk and risk-taking behavior Econometrica 64 683–689

  6. L. Eeckhoudt M.S. Kimball (1992) Background risk, prudence, and the demand for insurance G. Dionne (Eds) Contributions to Insurance Economics Kluwer Boston 239–254

  7. P.C. Fishburn B. Porter (1976) ArticleTitleOptimal portfolio with one safe and one risky asset: effects of changes in rate of return and risk Management Science 22 1064–1073

  8. C. Gollier (1995) ArticleTitleThe comparative statics and changes in risk revisited Journal of Economic Theory 66 522–535

  9. M. Kimball (1990) ArticleTitlePrecautionary saving in the small and the large Econometrica 58 53–73

  10. C. Menezes C. Geiss J. Tressler (1980) ArticleTitleIncreasing downside risk American Economic Review 70 921–932

  11. J. Meyer M.B. Ormiston (1983) ArticleTitleThe comparative statics of cumulative distribution function changes for the class of risk averse agents Journal of Economic Theory 31 153–169

  12. J. Meyer M.B. Ormiston (1985) ArticleTitleStrong increases in risk and their comparative statics International Economic Review 26 425–437

  13. M.B. Ormiston E.E. Schlee (1993) ArticleTitleComparative statics under uncertainty for a class of economic agents Journal of Economic Theory 61 412–422

  14. M. Rothschild J. Stiglitz (1971) ArticleTitleIncreasing risk: II. its economic consequences Journal of Economic Theory 3 66–84

  15. A. Sandmo (1971) ArticleTitleOn the theory of the competitive firm under price uncertainty American Economic Review 61 65–73

  16. L.Y. Tzeng (2001) ArticleTitleIncreases in risk and weaker marginal-payoff-weighted risk dominance Journal of Risk and Insurance 68 329–338

Download references

Author information

Correspondence to Suyeol Ryu.

Additional information

The authors gratefully acknowledge the helpful comments and suggestions of an anonymous referee

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Ryu, S., Kim, I. Left-Side strong increases in risk and their comparative statics. Theor Decis 57, 59–68 (2004). https://doi.org/10.1007/s11238-004-2859-3

Download citation

Keywords

  • left-side strong increases in risk
  • prudence
  • Rothschild–Stiglitz increases in risk
  • strong increases in risk