A note on changes in additive risky benefits and risky costs

Abstract

We introduce a distinction between additive risky benefits and additive risky costs, showing that it is relevant in determining decision maker choices in the presence of changes in risk. Results obtained show the specific role of the order of risk change when facing the two types of risk. Similarities and differences with the case of multiplicative risks are discussed. Moreover, the analysis is performed in two models studying respectively saving and self-protection and provides new applied results for both, some with reference to background risks.