Greater mutual aggravation

Sebastian Ebert; Diego C. Nocetti; Harris Schlesinger

doi:10.1287/mnsc.2017.2746

Greater mutual aggravation

Sebastian Ebert
, Diego C. Nocetti
, Harris Schlesinger

Frankfurt School of Finance and Management
Tilburg University
Clarkson University
University of Alabama

Research output: Contribution to journal › Article › peer-review

17 Scopus citations

Abstract

A large strand of research has identified when (i) a single risk is undesirable and (ii) two independent risks aggravate each other. We extend this line of inquiry by establishing when (iii) mutual aggravation is greater for greater risks. This natural property of greater mutual aggravation explains recent experimental findings on higher-order risk preferences, and can guide managerial behavior when risks in the decision environment become more severe.

Original language	English
Pages (from-to)	2809-2811
Number of pages	3
Journal	Management Science
Volume	64
Issue number	6
DOIs	https://doi.org/10.1287/mnsc.2017.2746
State	Published - Jun 2018
Externally published	Yes

Keywords

Mixed risk aversion
Mutual aggravation
Prudence
Risk apportionment
Stochastic dominance
Utility premium

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10.1287/mnsc.2017.2746

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abstract = "A large strand of research has identified when (i) a single risk is undesirable and (ii) two independent risks aggravate each other. We extend this line of inquiry by establishing when (iii) mutual aggravation is greater for greater risks. This natural property of greater mutual aggravation explains recent experimental findings on higher-order risk preferences, and can guide managerial behavior when risks in the decision environment become more severe.",

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AB - A large strand of research has identified when (i) a single risk is undesirable and (ii) two independent risks aggravate each other. We extend this line of inquiry by establishing when (iii) mutual aggravation is greater for greater risks. This natural property of greater mutual aggravation explains recent experimental findings on higher-order risk preferences, and can guide managerial behavior when risks in the decision environment become more severe.

KW - Mixed risk aversion

KW - Mutual aggravation

KW - Prudence

KW - Risk apportionment

KW - Stochastic dominance

KW - Utility premium

UR - https://www.scopus.com/pages/publications/85044371546

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DO - 10.1287/mnsc.2017.2746

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JO - Management Science

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Greater mutual aggravation

Abstract

Keywords

Access to Document

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