Intensity of Preferences for Bivariate Risk Apportionment

Présentation de David Cranich (CNRS, IESEG School of Management)

David Cranich présentera l'article "Intensity of Preferences for Bivariate Risk Apportionment", co-écrit avec Louis Eeckhoudt et Olivier Le Courtois.

Abstract: Bivariate risk apportionment is the preference for dispersing risks associated with two aspects of individuals’ well being into different states of the world. In this paper, we propose an intensity measure of this preference by extending to the bivariate case the concept of marginal rate of substitution between risks of different orders introduced in the univariate case by Liu and Meyer (2013). We show that the intensity measure of the preference for bivariate risk apportionment is characterized by bivariate risk attitudes in the sense of Ross.
The usefulness of our measures to understand economic choices is illustrated by the analysis of two specific decisions: savings under environmental risk and medical treatment in the presence of diagnostic risks.