Welcome to the new version of CaltechAUTHORS. Login is currently restricted to library staff. If you notice any issues, please email coda@library.caltech.edu
Published February 2009 | Accepted Version + Published
Report Open

When does aggregation reduce uncertainty aversion?

Abstract

We study the problem of uncertainty sharing within a household: "risk sharing," in a context of Knightian uncertainty. A household shares uncertain prospects using a social welfare function. We characterize the social welfare functions such that the household is collectively less averse to uncertainty than each member, and satises the Pareto principle and an independence axiom. We single out the sum of certainty equivalents as the unique member of this family which provides quasiconcave rankings over risk-free allocations.

Additional Information

From Author's copy: We thank David Ahn, Kim Border, and Massimo Marinacci for comments, and SangMok Lee for excellent research assistance. Our research was supported by the National Science Foundation through grant SES-0751980.

Attached Files

Published - sswp1299.pdf

Accepted Version - uncav.pdf

Files

uncav.pdf
Files (529.8 kB)
Name Size Download all
md5:c5d99a9c42e307d8c10b37cb4ee9afee
279.8 kB Preview Download
md5:fcc5494c09e23c712c8664e0262be090
250.0 kB Preview Download

Additional details

Created:
August 20, 2023
Modified:
January 13, 2024