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...

The purpose of this paper is to investigate the direction of change in the optimal value of the choice variable following a deterministic transformation of the underlying random variable. Here, the author considers transformations representing either first or second degree stochastically...

When the return to a risky asset is altered, an investor's optimal portfolio is likely to change. In working out the details of these changes for expected utility maximizing investors, previous research has focused on portfolios composed of one risky and one riskless asset or two independent...

The purpose of this paper is to illustrate how a t wo-part compensation system composed of a rigid base salary and a fle xible bonus can reduce turnover. It is shown that bonus pay is an eff ective retention device if it is risk reducing and is correlated with outside contract offers. For the...

Illegal tying often occurs when a monopolist jointly sells a product with a complementary requirement, also sold competitively. Along with selling the complement at its competi tive price, this paper shows that profit can increase when a monopoli st lets consumers bundle any amount of the...