This note analyzes the effect of a change in the covariance between labor income risk and interest rate risk on the threshold level for prudence ensuring positive precautionary saving, recently derived by Baiardi, Magnani and Menegatti (2014). We show that this effect is different in different...

This note shows that there exists a threshold level of optimal prevention for a risk neutral agent which separates cases where a risk averse agent exerts less effort in prevention than a risk neutral agent and cases where she exerts more effort. We also show that the risk averse agent makes...