Utility functions as a model of attitude towards risk

In this paper we follow such an approach which explains the motivation and behavior of both insured and insurers and throws some light on the background of the insurance premiums. In addition it is shown that according to the Law of diminishing marginal utility more risk aversive and cautious attitude limits the negative impact of incurred financial losses on utility scale.

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Year of publication:	2013
Authors:	Cholakov, Nikola
Published in:	Economic Thought journal. - Economic Research Institute, ISSN 0013-2993. - 2013, 1, p. 103-117
Publisher:	Economic Research Institute

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Type of publication:	Article
Classification:	G22 - Insurance; Insurance Companies ; G32 - Financing Policy; Capital and Ownership Structure ; D81 - Criteria for Decision-Making under Risk and Uncertainty
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010896756