The probability premium: a graphical representation
| Authors |
|
| Publication date |
2015
|
| Journal |
Economics Letters
|
| Volume | Issue number |
136
|
| Pages (from-to) |
39-41
|
| Organisations |
-
Faculty of Economics and Business (FEB) - Amsterdam School of Economics Research Institute (ASE-RI)
|
| Abstract |
We illustrate that Pratt’s probability premium can be given a simple graphical representation allowing a direct comparison to the equivalent but more prevalent concept of risk premium under expected utility. We also show that the probability premium’s graphical representation under the dual theory mimics that of the risk premium under expected utility.
|
| Document type |
Article
|
| Language |
English
|
| Published at |
https://doi.org/10.1016/j.econlet.2015.08.029
|
|
Permalink to this page
|
Back
