Optimal prevention and prudence in a two-period model

This work shows that in a two-period framework, prudence has an increasing effect on optimal prevention. This conclusion is the opposite to that obtained in a one-period framework [Eeckhoudt and Gollier, Economic Theory 26 (2005), 989-994]. This is due to the opposite effect of prevention on wealth in the period where the risk occurs.

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Year of publication:	2008
Authors:	Menegatti, M.
Institutions:	Facoltà di Economia, Università degli Studi di Parma
Subject:	Prevention \| Prudence

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Series:	Economics Department Working Papers.
Type of publication:	Book / Working Paper
Notes:	Number 2008-EP03 8 pages
Classification:	D81 - Criteria for Decision-Making under Risk and Uncertainty
Source:	RePEc - Research Papers in Economics

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