New results on the relationship among risk aversion, prudence and temperance
Under non-satiation and bounded marginal utility, prudence implies risk aversion. Under non-satiation and bounded marginal utility, imprudence implies risk loving. Under non-satiation and bounded marginal utility, temperance implies prudence. Under non-satiation and bounded marginal utility, intemperance implies imprudence. Implications for increases in risk, in downside risk and in outer risk are discussed.
risk aversion prudence temperance utility theory decision analysis risk analysis