主题：Optimal Effort in a Two-Period Model
主讲：Keith K.P. WONG，香港大学
摘要：This paper develops a generic model of effort intwo periods where in an individual exerts effort in monetary terms in the first period so as toimprove risk in the second period. We specify such a risk improvement by means of a linearcombination of two fixed probability distribution functions that can be ranked via first-orderstochastic dominance. When the two fixed probability distribution functions degenerateinto singletons, our two-period model of effort reduces to the two-period model ofself-protection. Within an intertemporal framework with Kreps-Porteus-Selden preferences,we examine the comparative statics of effort withrespect to the prevalence of uncertainty. Wefurther examine the precautionary motive ofsaving in our two-period model of effort whereinthe under lying uncertainty is endogenously determined by the choice of effort. Finally, weshow that our results are consistent with recentexperimental evidence for the negative relationship between prudence and self-protectionregardless of the timing of loss.