Resource title

Property insurance, portfolio selection and their interdependence

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Resource description

This paper studies the interdependence between property insurance and portfolio selection. The insurance premium of property loss is shown to play the role of subsistence consumption in the analysis. Then, security becomes a necessity good and an increase in any insurance parameter would make the investor more conservative. The effect of a stock market parameter on the marginal propensity to insure is shown to be opposite that on the marginal propensity to consume. Consequently, an increase in volatility would encourage those with a greater-than-unity relative risk aversion to purchase more insurance at the expense of current consumption.

Resource author

Fwu-Ranq Chang

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26305

Resource license

Adapt according to the presented license agreement and reference the original author.