Risk Aversion and the Propensities for Self-Insurance and Self-Protection

Briys, Éric; Schlesinger, Harris

doi:10.2307/1060623

Cited by 195 publications

(123 citation statements)

References 11 publications

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“…This is similar to the reasoning in the full-default model (Doherty and Schlesinger 1990 The ambiguous relationship between the degree of risk aversion and the demand for unreliable insurance, as mentioned by Doherty and Schlesinger (1990) in the case of total default, extends to partial default, i.e., a recovery rate 1 0 < ≤ t . The approach based on mean-preserving changes in risk in the sense of Rothschild and Stiglitz (1970) is similar to that used by Briys and Schlesinger (1990) to demonstrate the ambiguous link between risk aversion and self-protection.…”

Section: Increased Risk Aversionmentioning

confidence: 99%

Optimal coverage for incompletely reliable insurance

Mahul

Wright

2007

Economics Letters

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Section: Increased Risk Aversionmentioning

confidence: 99%

Optimal coverage for incompletely reliable insurance

Mahul

Wright

2007

Economics Letters

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“…A few papers have considered the effects of increased risk aversion on selfinsurance (Dionne and Eeckhoudt, 1985;Briys and Schlesinger, 1990;Lee, 1998;Dachraoui et al, 2004). Sweeney and Beard (1992) and Lee (2005) analyze the wealth effects on self-protection, and on self-insurance, respectively, in a two-state model.…”

Section: Introductionmentioning

confidence: 99%

Wealth Effects on Self-insurance

Lee

2010

Geneva Risk Insur Rev

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This paper considers the wealth effects on self-insurance investment that reduces loss. Wealthier individuals can bear the risk better, and invest less in self-insurance with two states of the world. Self-insurance, like insurance, is thus an inferior good. This known result does not extend to many states. The reason is that an increase in self-insurance does not necessarily reduce final wealth in good states and increase it in bad states. Self-insurance thus may not act as insurance, and wealthier individuals may not necessarily invest less in self-insurance. The paper proposes a condition under which self-insurance is inferior, and a condition under which it is normal.

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“…Dionne and Eeckhoudt [1985], Briys and Schlesinger [1990], , Jullien et al [1999], andGodfroid et al [1999] study the effects of increased risk aversion on selfinsurance and self-protection. Sweeney and Beard [1992] analyze the effects of an increase in initial wealth on self-protection, but not on self-insurance.…”

Section: Introductionmentioning

confidence: 99%

Wealth Effects on Self-Insurance and Self-Protection against Monetary and Nonmonetary Losses

Lee

2005

Geneva Risk Insur Rev

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This paper considers the wealth effects on self-insurance and self-protection activities against possible losses of monetary wealth such as properties and nonmonetary wealth such as health. Increased initial income or monetary wealth decreases the demand for self-insurance against monetary wealth loss under the decreasing absolute risk aversion assumption, and has an ambiguous effect on self-protection. However, increased initial monetary wealth increases both self-insurance and self-protection against health loss, explaining empirical trends, if wealth and health are complements. When multiple self-insurance activities against both types of losses are considered, the effect of an increase in initial monetary wealth on self-insurance against health loss remains the same, but the effect on self-insurance against wealth loss depends on the preferences.

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Risk Aversion and the Propensities for Self-Insurance and Self-Protection

Cited by 195 publications

References 11 publications

Optimal coverage for incompletely reliable insurance

Optimal coverage for incompletely reliable insurance

Wealth Effects on Self-insurance

Wealth Effects on Self-Insurance and Self-Protection against Monetary and Nonmonetary Losses

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