Self-insurance and self-protection: A nonexpected utility analysis |
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| Authors: | Kai A Konrad Stergios Skaperdas |
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| Institution: | 1. Department of Economics, University of Munich, Schackstrasse 4, D-80539, Munich, Germany
2. Department of Economics, School of Social Sciences, University of California, 92717, Irvine, Irvine, CA
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| Abstract: | This paper studies the comparative statics of self-insurance and self-protection for individuals with rank-dependent expected utility preferences. In particular, proportional wealth risks, background risk, and limited liability are considered. Limited liability has a major impact on self-insurance and self-protection. It can reverse seemingly robust comparative static results for the case of self-insurance and can eliminate some puzzling ambiguities for the case of self-protection. |
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