Multiplicative background risk

Abstract: "We consider random wealth of the multiplicative form xy, where x and y are statistically independent random variables. We assume that x is endogenous to the economic agent, but that y is an exogenous and uninsurable background risk. Our main focus is on how the randomness of y affects risk-taking behavior for decisions on the choice of x. We characterize conditions on preferences that lead to more cautious behavior. We also develop the concept of the affiliated utility function, which we define as the composition of the underlying utility function and the exponential function. This allows us to adapt several results for additive background risk to the multiplicative case." (author's abstract)

Object Details

• Alternative title: Multiplikatives Hintergrundrisiko
• Location: Deutsche Nationalbibliothek Frankfurt am Main
• Extent: Online-Ressource, 23 S.
• Language: Englisch
• Notes: Veröffentlichungsversion

References and Relationships

• Bibliographic citation: Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Forschungsschwerpunkt Markt und politische Ökonomie ; Bd. 02-06

Classification and Topics

• Keyword: Erwarteter Nutzen ; Nutzenfunktion ; Risikoverhalten ; Theorie ; Entscheidung bei Risiko

Contributors, Places and Time

• Event: Veröffentlichung
• (where): Berlin
• (when): 2002
• Creator: Franke, Günter ; Schlesinger, Harris ; Stapleton, Richard C.
• Contributor: Wissenschaftszentrum Berlin für Sozialforschung gGmbH

Further information

• URN: urn:nbn:de:0168-ssoar-112567
• Rights: Open Access unbekannt; Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.
• Last update: 15.08.2025, 7:28 AM CEST