Consumption, commitments and preferences for risk
By: Andrew Postlewaite, Larry Samuelson, Dan Silverman.
Contributors: Samuelson, Larry, 1953-; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10527; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10527.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Consumption (Economics); Risk.
Description: "We examine an economy in which the cost of consuming some goods can be reduced by making commitments to consumption levels independent of the state.  For example, it is cheaper to produce housing services via owner-occupied than rented housing, but the transactions costs associated with the former prompt relatively inflexible housing consumption paths.  We show that consumption commitments can cause risk-neutral consumers to care about risk, creating incentives to both insure risks and bunch uninsured risks together.  For example, workers may prefer to avoid wage risk while bearing an unemployment risk that is concentrated in as few states as possible"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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Mode of access: World Wide Web.