Explaining the Characteristics of the Power (CRRA) Utility Family

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132 Citations (Scopus)

Abstract

The power family, also known as the family of constant relative risk aversion (CRRA), is the most widely used parametric family for fitting utility functions to data. Its characteristics have, however, been little understood, and have led to numerous misunderstandings. This paper explains these characteristics in a manner accessible to a wide audience
Original languageEnglish
Pages (from-to)1329-1344
Number of pages16
JournalHealth Economics
Volume17
Issue number12
DOIs
Publication statusPublished - 2008

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