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More on insurance as a Giffen good

✍ Scribed by Eric Briys; Georges Dionne; Louis Eeckhoudt


Book ID
104738170
Publisher
Springer
Year
1989
Tongue
English
Weight
222 KB
Volume
2
Category
Article
ISSN
0895-5646

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✦ Synopsis


In this article, we generalize the Hoy and Robson (1981) analysis and provide a necessary and sufficient condition for insurance not to be a Giffen good. The condition gives a bound for the variation of absolute risk aversion that permits the wealth effect to be always dominated by the substitution effect.

In a well-known article, Mossin (1968) noted that insurance is an inferior good under decreasing absolute risk aversion. This contribution has generated some further investigations on the nature of the insurance activity (see, for example,


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