Some implications of common consequences in lotteries

David Crainich (1) , Louis Eeckhoudt (1) , Mario Menegatti (2)

1 LEM - Lille économie management - UMR 9221
2 UNIPR - Università degli studi di Parma = University of Parma

This work studies the implications of some aspects of preferences toward risk in the choice between two binary lotteries exhibiting a common consequence. The results obtained are then applied to two different problems: the choice between two risky challenges characterized by different rewards in the case of success and different probabilities of success and the choice between self-protection and self-insurance in the presence of the risk of incurring financial loss.

Mots clés: lotteries; risk aversion; risky challenges; self-protection; self-insurance

Domaines: Economies et finances

David Crainich, Louis Eeckhoudt, Mario Menegatti. Some implications of common consequences in lotteries. Journal of Risk and Uncertainty, 2019, 59, pp.185-202. ⟨10.1007/s11166-019-09314-4⟩. ⟨hal-02502811⟩