Explaining the characteristics of the power (CRRA) utility family.
نویسنده
چکیده
The power family, also known as the family of constant relative risk aversion (CRRA), is the most widely used parametric family for fitting utility functions to data. Its characteristics have, however, been little understood, and have led to numerous misunderstandings. This paper explains these characteristics in a manner accessible to a wide audience.
منابع مشابه
On the stability of the constant relative risk aversion (CRRA) utility under high degrees of uncertainty
Growth models under uncertainty and constant relative risk aversion (CRRA) utility are fragile in explaining consumers’ choice, as equilibrium consumption is dependent on distributional assumptions. We show that, under semi-nonparametric distributions, general equilibrium models are stable, as the existence of expected utility is guaranteed. © 2011 Elsevier B.V. All rights reserved.
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عنوان ژورنال:
- Health economics
دوره 17 12 شماره
صفحات -
تاریخ انتشار 2008