Greater Mutual Aggravation

Résumé du livre

A large strand of research has identified when (i) a single risk is undesirable and (ii) two independent risks aggravate each other. We extend this line of inquiry by establishing when (iii) mutual aggravation is greater for greater risks. This natural property of textit{greater mutual aggravation} explains recent experimental findings on higher-order risk preferences, and can guide managerial behavior when risks in the decision environment become more severe.