Arbeitspapier
Risk attitudes with state-dependent indivisibilities in consumption
Some consumption opportunities are both indivisible and only valuable in particular tates of nature. The existence of such state-dependent indivisible consumption opportunities influences a person's risk attitudes. In general, people are not risk averse anymore even if utility from divisible consumption is concave. I propose a definition of insurance in the context of state-dependent preferences and investigate the different motives underlying insurance demand. The same reasons that rule out risk aversion turn out to be the basis of a desire to insure. This calls into question the standard approach that bases insurance demand on risk aversion with important implications for policy and research.
- ISBN
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978-3-86788-933-9
- Language
-
Englisch
- Bibliographic citation
-
Series: Ruhr Economic Papers ; No. 805
- Classification
-
Wirtschaft
Microeconomic Behavior: Underlying Principles
Criteria for Decision-Making under Risk and Uncertainty
- Subject
-
risk preferences
indivisible consumption
insurance
gambling
- Event
-
Geistige Schöpfung
- (who)
-
Fels, Markus
- Event
-
Veröffentlichung
- (who)
-
RWI - Leibniz-Institut für Wirtschaftsforschung
- (where)
-
Essen
- (when)
-
2019
- DOI
-
doi:10.4419/86788933
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Fels, Markus
- RWI - Leibniz-Institut für Wirtschaftsforschung
Time of origin
- 2019
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