Centro de Documentacion de Fundación MAPFRE - Optimal prevention for multiple risks

MAP20170028796

Optimal prevention for multiple risks / Christophe Courbage, Henri Loubergé, Richard Peter

24 p.

Sumario: This article analyzes optimal prevention in a situation of multiple, possibly correlated risks. We focus on probability reduction (self-protection) so that correlation becomes endogenous. If prevention expenditures may be invested for both risks, a substitution effect arises. Under nonincreasing returns on self-protection, we find that increased dependance increases aggregate prevention expenditures, but not necessarily prevention expenditures for each risk due to differences in prevention efficiency. Similar results are found when considering changes in the severity of losses. Consequently, the comparative statics emphasize global effects versus allocation effects. Our results have strong policy implications, considering the numerous mandatory safety measures introduced by governments over the past years

En: The Journal of risk and insurance. - Nueva York : The American Risk and Insurance Association, 1964- = ISSN 0022-4367. - 04/09/2017 Volumen 84 Número 3 - septiembre 2017 , p. 899-922

1. Gerencia de riesgos . 2. Autoprotección . 3. Reducción de riesgos . I. Loubergé, Henri . II. Peter, Richard . III. Title.