(1) Université de Nancy, 2, 4, rue de la Ravinelle CO 26, 54035 Nancy cedex, France
Abstract:
By means of minimal assumptions on the individual preferences, I show that the Willingness To Pay (WTP) for both a FSD and
SSD reduction of risk is the sum of a mean effect, a pure risk effect and a wealth effect. As a result, the WTP of a risk-averse
decision maker may be lower than the WTP of a risk-neutral one, for a large class of individual preferences’ representation
and a large class of risks.