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Economics Research International
Volume 2010 (2010), Article ID 180478, 5 pages
Research Article

Comparative Risk Aversion under Background Risk Revisited

1Graduate School of Economics, Osaka University, Machikaneyama 1-7, Toyonaka, Osaka 560-0043, Japan
2Faculty of Economics, Osaka Sangyo University, Nakagaito 3-1-1, Daito, Osaka 574-8530, Japan

Received 28 April 2010; Revised 9 October 2010; Accepted 10 December 2010

Academic Editor: Philip J. Grossman

Copyright © 2010 Masamitsu Ohnishi and Yusuke Osaki. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


This paper determines a new sufficient condition of the (von Neumann-Morgenstern) utility function that preserves comparative risk aversion under background risk. It is the single crossing condition of risk aversion. Because this condition requires monotonicity in the local sense, it may satisfy the U-shaped risk aversion observed in the recent empirical literature.