How Changing Prudence and Risk Aversion Affect Optimal Saving

We show how optimal saving in a two-period model is affected when prudence and risk aversion of the underlying utility function change. Increasing prudence alone will induce higher savings only if, for certain combinations of the interest rate and the pure time discount rate, there is distributional neutrality between the two periods. Otherwise, changes of risk aversion that affect the distribution between the periods must also be taken into account

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Year of publication:	[2021]
Authors:	Bauer, Christian ; Buchholz, Wolfgang
Publisher:	[S.l.] : SSRN
Subject:	Theorie \| Theory \| Sparen \| Savings \| Risikoaversion \| Risk aversion \| Entscheidung unter Risiko \| Decision under risk

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Extent:	1 Online-Ressource (15 p)
Series:	CESifo Working Paper Series ; No. 2438
Type of publication:	Book / Working Paper
Language:	English
Notes:	Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 2008 erstellt
Other identifiers:	10.2139/ssrn.1291112 [DOI]
Classification:	D11 - Consumer Economics: Theory ; D81 - Criteria for Decision-Making under Risk and Uncertainty ; E21 - Consumption; Saving ; H43 - Project Evaluation; Social Discount Rate
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10013316461