Optimal Saving and Prudence in a Possibilistic Framework
In this paper we study the optimal saving problem in the framework of possibility theory. The notion of possibilistic precautionary saving is introduced as a measure of the way the presence of risk (represented by a fuzzy number) influences a consumer in establishing the level of optimal saving. The equivalence between the prudence condition (in the sense of Kimball) and a positive possibilistic precautionary saving is proved. Some relations between possibilistic risk aversion, prudence and possibilistic precautionary saving are established.
Keywordsprecautionary saving prudence possibility theory
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