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Seoul Journal of Economics - Vol. 18 , No. 1
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Seoul Journal of Economics - Vol. 18, No. 1, pp. 45-57
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 28 Feb 2005
Received 17 Aug 2004 Revised 13 Apr 2005

Left-side Relatively Strong Increases in Risk and Their Comparative Statics
Soojong Kim ; Iltae Kim ; Suyeol Ryu
Deputy Director, The Board of Audit and Inspection, Seoul, Korea, Tel: +82-2-2011-3213, Fax: +82-2-2011-2869 (sjkmsu@yahoo.co.kr)
Professor and Corresponding author, Department of Economics, Chonnam National University, Gwangju 500-757, Korea, Tel: +82-62-530-1550, Fax: +82-62-530-1429 (kit2603@chonnam.ac.kr)
Research Fellow, Busan Development Institute, Busan, Republic of Korea, Tel: +82-51-640-2025, Fax: +82-51-640-2009 (ryusuyeo@bdi.re.kr)

JEL Classification: D81

Abstract

This paper proposes a new concept, a left-side relatively strong increase in risk(L-RSIR) order that extends the definition of a relatively strong increase in risk(RSIR) order. We show that for the class of linear payoffs, one can obtain an appealing comparative statics result for L-RSIR shifts by imposing additional restrictions on the risk preferences of a risk-averse decision maker.

Keywords: Left-side relatively strong increases in risk, Prudence, Relatively strong increases in risk
Acknowledgments

This is a revision of a paper presented at the Korean Economic Association 11th international conference. The authors wish to thank anonymous referees for helpful comments.

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