Increasing outer risk

Menezes, Carmen F.; Wang, X.Henry

doi:10.1016/j.jmateco.2004.07.002

Cited by 79 publications

(37 citation statements)

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“…The results in this section analyze this reaction when the change occurs in other moments of the random variables describing environmental risks, such as skewness and kurtosis or even higher-order moments. Propositions 9, 11 and 13 show that the conclusions derived in these cases 36 On this see Menezes et al (1980), Menezes and Wang (2005), Schlesinger (2006, 2008). 37 Eeckhoudt and Schlesinger (2008), who study a two-period consumption problem, suggest that a firstdegree risk change can occur in that framework when the probability of becoming unemployed increases, reducing future expected income.…”

Section: Corollary 14mentioning

confidence: 85%

“…39 Finally, consider a fourth degree risk increase case (N =4 in the previous proposition). In this case, for given expected value, variance and skewness we have an increase in the kurtosis of the distribution (see Menezes and Wang 2005). For example, this could be climate change which affects temperature level determining an increase in the probability of high and low temperatures, but keeping constant the expected value, the variance and the skewness of the temperature distribution.…”

Section: Corollary 14mentioning

confidence: 99%

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Pigouvian tax, abatement policies and uncertainty on the environment

Baiardi

Menegatti

2011

J. Econ.

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The paper examines the effects of environmental uncertainty on Pigouvian tax and abatement policy used, either separately or contemporaneously, to counteract pollution. We discuss these effects by introducing three kinds of risk: risk on the environmental quality, risk on the impact of pollution and risk on the impact of abatement. For each case we determine the conditions ensuring that risk increases the size of public intervention and provide an economic interpretation and some parallelisms with other risk problems. The last part of the paper generalizes some of our results to the case of N -th order risk changes.

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Section: Corollary 14mentioning

confidence: 85%

Section: Corollary 14mentioning

confidence: 99%

Pigouvian tax, abatement policies and uncertainty on the environment

Baiardi

Menegatti

2011

J. Econ.

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“…The case where N = 3 is labeled as an "increase in downside risk" and given special attention in a paper by Menezes et al [21]. The case where N = 4 is examined in part by Menezes and Wang [22].…”

Section: De…nitionmentioning

confidence: 99%

Apportioning of risks via stochastic dominance

Eeckhoudt

Schlesinger

Tsetlin

2009

Journal of Economic Theory

125

120

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. th -order stochastic dominance. The basic idea is that a decision maker exhibiting (N + M) th -order stochastic dominance preference will allocate the statecontingent lotteries in such a way as not to group the two "bad" lotteries in the same state, where "bad" is defined via i th -order stochastic dominance. In this way, we can extend and generalize existing results about risk attitudes. This lottery preference includes behavior exhibiting higher order risk effects, such as precautionary effects and tempering effects. Terms of use: Documents in EconStor mayJEL Code: D81.

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“…This tool seems to be a nice way to illustrate good-with-bad types of preference rankings. Likewise, it graphically shows us how to generalize the "inner risks" and "outer risks" of Menezes and Wang (2005).…”

Section: Concluding Commentsmentioning

confidence: 99%

“…4 I then show how this basic approach can be easily portrayed using a lattice structure. This approach allows for a nice generalization of the framework of Menezes and Wang (2005), who defined the concept of "outer risk" in their description of temperance. I next show how an existing lattice structure leads to a natural precedence ordering and how this precedence ordering can be used inductively to generate higher orders of risk apportionment.…”

mentioning

confidence: 99%

Lattices and Lotteries in Apportioning Risk

Schlesinger

2015

Geneva Risk Insur Rev

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Lattices and Lotteries in Apportioning RiskAbstract Although risk aversion has been used in economic models for over 275 years, the past few decades have shown how higher order risk attitudes are also quite important. A behavioral approach to defining such risk attitudes was developed by Eeckhoudt and Schlesinger (2006), based upon simple lottery preference. This article show how the mathematics of lattice theory can be used to model these lottery preferences. In addition to modeling a simple lattice structure, I show how such lattices can be extended in order to develop a better understanding of higher order risk attitudes.JEL-Code: D810.

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Increasing outer risk

Cited by 79 publications

References 20 publications

Pigouvian tax, abatement policies and uncertainty on the environment

Pigouvian tax, abatement policies and uncertainty on the environment

Apportioning of risks via stochastic dominance

Lattices and Lotteries in Apportioning Risk

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