Self-protection with random costs - Archive ouverte HAL
Article Dans Une Revue Insurance: Mathematics and Economics Année : 2021

Self-protection with random costs

David Crainich
Mario Menegatti
  • Fonction : Auteur

Résumé

We study the consequences of introducing random costs (as opposed to certain costs) on the propensity to implement self-protection actions, i.e. actions reducing the probability of a loss. Our analysis is performed in four standard self-protection frameworks: (1) the one-period model in which the cost and benefit occur at the same period of time; (2) a variation of this one-period model where wealth in each state of nature is a random variable; (3) the one-period model where the cost of the self-protection action is only paid in the absence of loss; (4) the two-period model in which the cost of self-protection precedes its benefit. For each of these models we provide a set of conditions ensuring clear-cut effects to occur and a specific interpretation for each of them.
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Dates et versions

hal-03273664 , version 1 (18-10-2021)

Identifiants

Citer

David Crainich, Mario Menegatti. Self-protection with random costs. Insurance: Mathematics and Economics, 2021, 98, pp.63-67. ⟨10.1016/j.insmatheco.2021.02.006⟩. ⟨hal-03273664⟩
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