Relative risk

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Decreasing relative risk premium

We consider the risk premium π demanded by a decision maker with present wealth x in order to be indifferent between obtaining a new level of wealth y1 with certainty, or to participate in a lottery which either results in unchanged wealth x or a level of wealth y2 > y1. We then define the relative risk premium λ as the quotient between π and the increase in wealth y1−x which the decision maker...

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ژورنال

عنوان ژورنال: BMJ

سال: 2007

ISSN: 0959-8138,1468-5833

DOI: 10.1136/bmj.39129.623368.be