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Multiplicative Risk Prudence

SSRN Electronic Journal
2005
  • 1
    Citations
  • 2,624
    Usage
  • 0
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    1
    • Citation Indexes
      1
  • Usage
    2,624
    • Abstract Views
      2,500
    • Downloads
      124
  • Ratings
    • Download Rank
      460,678

Article Description

We examine the optimal saving decision of individuals who face a multiplicative risk. An individual is defined to be multiplicative risk prudent if multiplying a pure risk to her future wealth raises her optimal savings. We show that an individual is multiplicative risk prudent if and only if her relative risk prudence uniformly exceeds two. Our result suggests a more restrictive assumption that needs to be imposed on preferences for individuals to be risk prudent.

Bibliographic Details

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