Hostname: page-component-586b7cd67f-2brh9 Total loading time: 0 Render date: 2024-11-26T23:35:26.541Z Has data issue: false hasContentIssue false
  • English
  • Français

Risk-Bearing And Consumption Theory

Published online by Cambridge University Press:  29 August 2014

Denis Moffet
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

A simple risky situation is studied in the framework of consumption theory. Saving is shown to be a substitute to insurance. Two new concepts, riskbearing budget and effective risk coverage, are introduced in order to give a more accurate insight into the optimal risk-bearing decision. The effect of a variation in current consumption and in wealth upon the optimal insurance coverage is analysed.

Type
Research Article
Information
ASTIN Bulletin: The Journal of the IAA , Volume 8 , Issue 3 , September 1975 , pp. 342 - 358
Copyright
Copyright © International Actuarial Association 1975

References

[1]Arrow, K. J., “Uncertainty and the Welfare Economics of Medical Care”, American Economic Review, LIII, December 1963, pp. 941–973.Google Scholar
[2]Arrow, K.J., Aspects of the Theory of Risk-Bearing. Helsinki 1965.Google Scholar
[3]Borch, K. H., “Reciprocal Reinsurance Treaties”, The ASTIN Bulletin, Vol. 1, Part IV, December 1960, pp. 170–191.CrossRefGoogle Scholar
[4]Borch, K. H., The economics of Uncertainty, PrincetonUniversity Press, 1968.Google Scholar
[5]Mossin, J., “Aspects of Rational Insurance Purchasing”, The Journal of Political Economy, Vol. 76, July–August 1968, pp. 553–568.CrossRefGoogle Scholar
[6]Murray, M. L., “Empirical Utility Functions and Insurance Consumption Decisions”, The Journal of Risk and Insurance, March 1972, pp. 31–41.CrossRefGoogle Scholar
[7]Pashigian, B.P., Schkade, L. L. and Menefee, G. H., “The Selection of an Optimal Deductible for a Given Insurance Policy”, Journal of Business, XXXIX, No. 1, January 1966, pp. 35–44.CrossRefGoogle Scholar
[8]Pratt, J. W., “Risk Aversion in the Small and in the Large”, Econometrica, Vol. 32, January–April 1964, pp. 122–136.CrossRefGoogle Scholar
[9]Sandmo, A., “Portfolio Choice in a Theory of Saving”, The Swedish Journal of Economics, 1968, pp. 106–126.CrossRefGoogle Scholar
[10]Smith, V. L., “Optimal Insurance Coverage”, The Journal of Political Economy, Vol. 76, January–February 1968, pp. 68–77.CrossRefGoogle Scholar