Economic decision making under uncertainty is universally characterized by aversion to risk. One of the most basic concepts in economic theory, risk aversion is usually explained by the concavity of the utility function, which, in turn, is based on a person's satiability for wealth. I use genetic al
Observing different orders of risk aversion
โ Scribed by Graham Loomes; Uzi Segal
- Publisher
- Springer
- Year
- 1994
- Tongue
- English
- Weight
- 971 KB
- Volume
- 9
- Category
- Article
- ISSN
- 0895-5646
No coin nor oath required. For personal study only.
๐ SIMILAR VOLUMES
Two definitions of risk aversion have recently been proposed for nonexpected utility theories of choice under uncertainty: the former refers the measure of risk aversion (Montesano 1985(Montesano , 1986(Montesano and 1988) ) directly to the risk premium (i.e. to the difference between the expected v
One rational individual may be willing to pay less than another to insure a risk ~ when another risk ri, is present even though he would pay more to insure any isolated risk, and even though E(~ [~i,) = 0 for all w. Noticing this, Ross (1981) proposed excluding such reversals and gave equivalent ana
In the expected utility case, the risk-aversion measure is given by the Arrow-Pratt index. Three proposals of a risk-aversion measure for the nonexpected utility case are examined. The first one sets "the second derivative of the acceptance frontier as a measure of local risk aversion." The second o