Download This PaperZeroth, First, and Second Order Prudence Measures
34 Pages Posted: 24 Mar 2022
Date Written: February 13, 2022
Abstract
We derive two measures for the zeroth order prudence and one measure for the first order prudence and show how these three measures, together with Kimball's (1990) second order prudence measure, determine precautionary risk premium, probability premium, and savings.
Keywords: zeroth order prudence, first order prudence, second order prudence, precautionary saving
JEL Classification: D81
Suggested Citation: Suggested Citation
Huang, James Xiaoping, Zeroth, First, and Second Order Prudence Measures (February 13, 2022). Available at SSRN: https://ssrn.com/abstract=4033661 or http://dx.doi.org/10.2139/ssrn.4033661
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