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Alternative Monetary-Fiscal Policies and Sectoral Credit Flows
Some Conjectures on Policy Problems of the 1970's
Technological Change in the Soviet Collective Farm
Transport Costs and the Static Welfare Costs of Tariffs
The Inflation Problem During Phase III
Multinational Corporations and the International Adjustment Process
Price Controls in 1973: Strategies and Problems
The Property Tax: Progressive or Regressive? Discussion
Choice Involving Unwanted Risky Events and Optimal Insurance: Comment
In a recent paper in this Review, J. M. Parkin and S. Y. Wu (P-W) analyzed the demand for insurance in a model with two uncertain states of the world, A and B. They assumed that an unwanted event (say, illness) occurs in state B and they also permit the individual's conditional utility function to vary across these states. The purpose of this note is to show that while their mathematical statement of the problem was formally correct, their interpretation of results was erroneous. I shall briefly state a more accurate interpretation of their model's implications.