For increasing absolute risk aversion, the private provision Nash equilibrium is unique.

For increasing absolute risk aversion, the slope of the reaction function (23) lies between -1 and 0, which corresponds to "normal" preferences in the standard consumer theory leading to a unique private provision level (Comes, Hartley, and Sandler, 1999).

decreasing, constant, and

increasing absolute risk aversion as [Theta] [greater than] 1, = 1, and [less than] 1; and

Increasing absolute risk aversion is thought to be an unreasonable assumption [Arrow, 1965; Blanchard and Mankiw, 1988].

Moreover, the utility function constructed by Gollier has U" being a discontinuous step function with U'" = 0 implying the special case of uniform

increasing absolute risk aversion.

This point is continned later when it is shown that these restrictions are also implied by a "separable" utility function displaying

increasing absolute risk aversion.

Thus, the price intercept of the demand curve will increase with initial income under

increasing absolute risk aversion (IARA).

However, some utility functions with an increasing absolute risk aversion also satisfy this set of conditions.

The case of increasing absolute risk aversion is obtained by symmetry.

Using insurance data, Eisenhauer and Halek (1999) found

increasing absolute risk aversion, which implies IRRA.

Of course,

increasing absolute risk aversion is not a very reasonable assumption.

o] when the prospect exhibits

increasing absolute risk aversion.