This thesis investigates the optimal ex-ante mix of self-protection and self-insurance technologies employed to reduce the risk of biological invaders in the presence of exogenous variables within the probability and damage functions. This is accomplished by using a theoretical endogenous risk model that extends previously developed frameworks. This thesis contributes to the previous work in two ways. (1) Employing a general framework with simultaneous decision making over self-protection and self-insurance, this thesis analyzes how each parameter including income, the costs of each activity, an exogenous factor that affects only the probability of an invasion, and a separate exogenous factor that affects only the damages influence the level of self-protection and self-insurance. (2) The comparative static results are derived in the benchmark case of risk neutral preferences and qualitatively compared to an extended case of risk averse preferences. The results of the analysis indicate that under risk neutral preferences the signs of the comparative statics are unambiguous while under risk aversion the results are not clearly defined. Thus, the ambiguity of signs in the latter case can be attributed to the unobservable utility terms present under risk averse preferences. Therefore, it can be concluded that the model is not capable of yielding a decision criteria that will hold universally because the results are dependent on the nature of the risk averse curve
| Identifer | oai:union.ndltd.org:ucf.edu/oai:stars.library.ucf.edu:etd-1237 |
| Date | 01 January 2004 |
| Creators | Safford, Pamela |
| Publisher | STARS |
| Source Sets | University of Central Florida |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | Electronic Theses and Dissertations |
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