Analyses of risk-bearing often assume that agents face only one risk. Agents however usually face several risks and the interaction between them can affect the willingness to bear any one of them. We consider how the introduction of background risk affects the comparative statics predictions of...

This paper analyzes the effect of increases in risk aversion on a general consumer choice model with multiple sources of risk. Sufficient--and, in the two commodity case, necessary--conditions for a given demand function to increase (or decrease) with increased risk aversion are derived. These...

This paper analyzes the effect of wage-rate uncertainty on long-run competitive equilibrium for a labor market made up of heterogeneous workers. The authors show that, if workers are risk-averse, an increase in wage rate uncertainty always lowers aggregate hours of work and increases the...