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In this paper, optimal saving models with two risk components are studied: the labor income risk and the interest rate risk. These risks can be modeled probabilistically by random variables or possibilistically by fuzzy numbers. In mixed models, one of the components is probabilistic and the other one is possibilistic. After the construction of two mixed models of optimal saving, several notions of precautionary saving are defined. These measure the variation in optimal saving level when moving from one model to another (usually by adding a risk component). The main results of the paper establish necessary and sufficient conditions on the positivity of different precautionary savings. (This means that the presence of new risks generates extra-saving.) [ABSTRACT FROM AUTHOR]

This paper proposes two mixed models to study a consumer’s optimal saving in the presence of two types of risk: income risk and background risk. In the first model, income risk is represented by a fuzzy number and background risk by a random variable. In the second model, income risk is represented by a random variable and background risk by a fuzzy number. For each model, three notions of precautionary savings are defined as indicators of the extra saving induced by income and background risk on the consumer’s optimal choice. In conclusion, we can characterize the conditions that allow for extra saving relative to optimal saving under certainty, even when a certain component of risk is modelled using fuzzy numbers.

In this paper, the effect of posibilistic or mixed background risk on the level of optimal prevention is studied. In the framework of five purely possibilistic or mixed models, necessary and sufficient conditions are found such that the level of optimal saving decreases or increases as a result of the actions of various types of background risk. This way our results complete those obtained by Courbage and Rey for some prevention models with probabilistic background risk. [ABSTRACT FROM AUTHOR]

The models of this paper refer to mixed risk situations: one parameter is a fuzzy number and the other is a random variable. Three notions of mixed expected utility are proposed as a mathematical basis of these models. The results of the paper describe risk aversion and prudence of an agent in front of a risk situation with mixed parameters and the changes of optimal saving as an effect of mixed risk. [ABSTRACT FROM AUTHOR]

This paper proposes two mixed models to study optimal saving in the presence of two types of risk: income risk and background risk. In the first model the income risk is a fuzzy number and the background risk is a random variable. In the second model the income risk is a random variable and the background risk is a fuzzy number. For these models three notions of precautionary saving are defined as indicators of the changes induced by the income risk and the background risk on the choice of optimal saving. [ABSTRACT FROM AUTHOR]

Univariate almost stochastic dominance has been widely studied and applied since its introduction by Leshno and Levy (Manag Sci 48:1074-1085, ). This paper extends this construction to the bivariate case by means of suitable two-attribute utility functions. After having confined correlation aversion and correlation loving to some acceptable levels, bivariate almost stochastic dominance rules are introduced for the preferences exhibiting confined correlation aversion and confined correlation loving. The impact of a change in risk in terms of bivariate almost stochastic dominance on optimal saving is analyzed as an application, as well as the effect of envy and altruism on income distributions. Finally, alternative definitions of bivariate almost stochastic dominance are discussed, as well as testing procedures for such dominance rules in financial problems. [ABSTRACT FROM AUTHOR]

Economists conducting normative analyses of household financial decisions typically assume specific values of parameters of the household utility function. We review 12 normative analyses and discuss justifications for the personal discount rates assumed. None of the normative articles cited an independent estimate of the personal discount rate. Instead, the authors made arbitrary assumptions or cited another article’s assumption. We conclude with recommendations for assumptions about the personal discount rate in normative analyses of household financial decisions. [ABSTRACT FROM PUBLISHER]