Multivariate Risk Aversion and Consumer Choice

Abstract

This paper analyzes the effect of increases in risk aversion on a general consumer choice model with multiple sources of risk. Sufficient--and, in the two commodity case, necessary--conditions for a given demand function to increase (or decrease) with increased risk aversion are derived. These general results are illustrated with a two-period, consumption-savings model. Copyright 1990 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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