Title A Possibilistic and Probabilistic Approach to Precautionary Saving
Authors Georgescu, Irina, CRISTOBAL CAMPOAMOR , ADOLFO, LUCIA CASADEMUNT, ANA MARÍA, LUCIA CASADEMUNT, ANA MARÍA, CRISTOBAL CAMPOAMOR , ADOLFO
External publication No
Means Panoeconomicus
Scope Article
Nature Científica
JCR Quartile 4
SJR Quartile 2
JCR Impact 0.43800
SJR Impact 0.34200
Area International
Web https://www.scopus.com/inward/record.uri?eid=2-s2.0-85021388852&doi=10.2298%2fPAN130129003G&partnerID=40&md5=097c32a477cfb7bc88a4900b7eb0b346
Publication date 01/01/2017
ISI 000405137700002
Scopus Id 2-s2.0-85021388852
DOI 10.2298/PAN130129003G
Abstract This paper proposes two mixed models to study a consumer's optimal saving in the presence of two types of risk: income risk and background risk. In the first model, income risk is represented by a fuzzy number and background risk by a random variable. In the second model, income risk is represented by a random variable and background risk by a fuzzy number. For each model, three notions of precautionary savings are defined as indicators of the extra saving induced by income and background risk on the consumer's optimal choice. In conclusion, we can characterize the conditions that allow for extra saving relative to optimal saving under certainty, even when a certain component of risk is modelled using fuzzy numbers.
Keywords Optimal saving; Background risk; Income risk; Possibility theory
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