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A NOTE ON THE JOINT OCCURRENCE OF INSURANCE AND GAMBLING

  • LARRY E. JONES (a1)
Abstract

This note provides a formal justification for the Friedman and Savage nonconcavity in the utility of money. This is based on the possibility of indivisibilities in the consumption possibilities set. A precise characterization of when gambling is optimal (and the optimal type) is provided in one special case. Some possible limitations are considered.

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Corresponding author
Address correspondence to: Larry E. Jones, Department of Economics, University of Minnesota, 1035 Heller Hall, 271-19th Avenue South, Minneapolis, MN 55455, USA; e-mail: lej@econ.umn.edu.
References
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Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
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