Left-side Relatively Strong Increases in Risk and Their Comparative Statics

Abstract

This paper proposes a new concept. a left-side relatively strong increase in risk (L-RSIR) order that extends the definition of a relatively strong increase in risk (RSIR) order. We show that for the class of linear payoffs, one can obtain an appealing comparative statics result for L-RSIR shifts by imposing additional restrictions on the risk preferences of a risk-averse decision maker.