Precautionary Saving with Selden/Kreps-Porteus Preferences Revisited

14 Pages Posted: 24 Jun 2014 Last revised: 5 Jan 2015

See all articles by Jingyuan Li

Jingyuan Li

Lingnan University - Department of Finance and Insurance

Jianli Wang

Nanjing University of Aeronautics and Astronautics - College of Economics and Management

Date Written: September 17, 2014

Abstract

This paper re-examines precautionary saving with general Selden/Kreps-Porteus preferences. The conditions existing in the literature are much more complex than in the Expected Utility framework. We obtain a simple and intuitive result on precautionary savings via disentangling time preference and risk preference effects.

Keywords: Precautionary saving; Prudence; Selden/Kreps-Porteus Preferences

JEL Classification: D81, D91, E21

Suggested Citation

Li, Jingyuan and Wang, Jianli, Precautionary Saving with Selden/Kreps-Porteus Preferences Revisited (September 17, 2014). Available at SSRN: https://ssrn.com/abstract=2458316 or http://dx.doi.org/10.2139/ssrn.2458316

Jingyuan Li (Contact Author)

Lingnan University - Department of Finance and Insurance ( email )

Castle Peak Road
Tuen Mun, New Territories
Hong Kong
China

Jianli Wang

Nanjing University of Aeronautics and Astronautics - College of Economics and Management ( email )

Nanjing
China

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