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Article Dans Une Revue Theory and Decision Année : 2005

Willingness to Pay for Risk Reduction and Risk Aversion without the Expected Utility Assumption

Eric Langlais
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Résumé

By means of minimal assumptions on the individual preferences, I show that the Willingness To Pay (WTP) for both a FSD and SSD reduction of risk is the sum of a mean effect, a pure risk effect and a wealth effect. As a result, the WTP of a risk-averse decision maker may be lower than the WTP of a risk-neutral one, for a large class of individual preferences’ representation and a large class of risks.

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hal-00279144 , version 1 (14-05-2008)

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Eric Langlais. Willingness to Pay for Risk Reduction and Risk Aversion without the Expected Utility Assumption. Theory and Decision, 2005, 59, pp.43-50. ⟨10.1007/s11238-005-7303-9⟩. ⟨hal-00279144⟩
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