This paper examines the effect of prudence on the optimal choices of advance and contemporaneous prevention in a context where the two kinds of prevention are used together. We show that, under some conditions on the probability of loss occurrence, prudence tends to increase advance prevention and to reduce contemporaneous prevention, while imprudence tends to do the opposite. Further results on the effect of prudence/imprudence on agents’ optimal behavior are provided.
Prudence and Different Kinds of Prevention / Menegatti, Mario. - In: EASTERN ECONOMIC JOURNAL. - ISSN 0094-5056. - 44:(2018), pp. 273-285. [10.1057/s41302-016-0081-y]
Prudence and Different Kinds of Prevention
MENEGATTI, Mario
2018-01-01
Abstract
This paper examines the effect of prudence on the optimal choices of advance and contemporaneous prevention in a context where the two kinds of prevention are used together. We show that, under some conditions on the probability of loss occurrence, prudence tends to increase advance prevention and to reduce contemporaneous prevention, while imprudence tends to do the opposite. Further results on the effect of prudence/imprudence on agents’ optimal behavior are provided.File in questo prodotto:
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