Assuming a risk-neutral bank and assuming household utility to be exponential, we show how under information symmetry …

and on the literature of imperfectly divisible consumption to argue that the general purpose of insurance is not a risk … transfer, but meeting a conditional need. In this way, insurance aligns the risk in one's ftnancial endowment with the risk in …

We study the representative consumer's risk attitude and efficient risk-sharing rules in a single-period, single …-good economy in which consumers have homogeneous probabilistic beliefs but heterogeneous risk attitudes. We prove that if all … consumers have convex absolute risk tolerance, so must the representative consumer. We also identify a relationship between the …

that consumption commitments can cause risk-neutral consumers to care about risk, creating incentives to both insure risks … and bunch uninsured risks together. For example, workers may prefer to avoid wage risk while bearing an unemployment risk …

flexibility. We show that such consumption commitments can induce consumers with risk-neutral underlying utility functions to be … risk averse over small variations in income, but sometimes to seek risk over large variations. As a result, optimal …

flexibility. We show that such consumption commitments can induce consumers with risk-neutral underlying utility functions to be … risk averse over small variations in income, but sometimes to seek risk over large variations. As a result, optimal …

flexibility. We show that such consumption commitments can induce consumers with risk-neutral underlying utility functions to be … risk averse over small variations in income, but sometimes to seek risk over large variations. As a result, optimal …