measures with risk aversion measure 1/η to be obtained. The CRRA class of utility
functions results from choosing η= 0 . Gollier (2001) provides a more detailed discussion
of special cases of the HARA family. A modified version of his notation was used here.
3.4.6Comparative Statics Using Risk Aversion Measures
The derivatives of risk aversion, measured by either
A
u
′
(x
)
or
R
u
′
(x
)
, are important factors
in determining how the choice made by a decision maker changes as the starting wealth
changes. This is true in most decision models where expected utility is maximized. Two of
the best-known results are ...
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