risk aversion

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Related to Risk attitude: Risk perception, Risk averse

Risk Aversion

The subjective tendency of investors to avoid unnecessary risk. It is subjective because different investors have different definitions of unnecessary. An investor seeking a large return is likely to see more risk as necessary, while one who only wants a small return would find such an investment strategy reckless. However, most rational economic actors are sufficiently risk averse such that, given two investments with the same return and different levels of risk, they would choose the less risky investment.

risk aversion

The tendency of investors to avoid risky investments. Thus, if two investments offer the same expected yield but have different risk characteristics, investors will choose the one with the lowest variability in returns. If investors are risk averse, higher-risk investments must offer higher expected yields. Otherwise, they will not be competitive with the less risky investments.

risk aversion

the tendency for managers, consumers and other decision-makers to avoid undertaking risks and to choose less risky alternatives. See RISK PREMIUM.

risk aversion

the tendency for managers, consumers and other decision makers to avoid undertaking risks and to choose less risky alternatives. See RISK PREMIUM.
References in periodicals archive ?
Based on our findings, we could, in principle, use millions of existing medical brain scans to assess risk attitudes in populations," relates Levy, a former NYU postdoctoral fellow.
This concept captures opportunity-based behaviour and consists of six behavioural dimensions: international motivation, innovativeness, risk attitude, market orientation (which includes proactiveness), learning orientation and networking orientation (towards competitors and non-competitors).
These theories mainly studied the distribution of return skewness from macroscopic perspectives, but with the development of behavioral financial theory, more scholars came to consider the impact of investors risk attitudes and behavioral biases on the skewness of return distribution from microscopic perspectives.
Daruvala (2007) uses a modification of the Becker-Degroot-Marschack instrument to assess subjects' risk attitudes.
If these two parties do not have the same risk attitude, efficiency loss could result unless the affected party has access to sufficiently flexible contracts and knowledge of the risk attitude of the individual making the decisions (e.
This article proposes two coefficients, "fear of loss" (FL) and "happiness of win" (HW), to capture the variation of risk attitude with respect to wealth.
Testing the effect of risk attitude on auditor judgment using multiattribute utility theory.
It will only reflect specific assets or specific countries where the risk attitude is exceptionally high.
We also used Warneryd's (2000, 2001) Investment Risk Attitude Scale (IRAS).
outline how decision making processes are impacted, project phases, and risk attitude and management techniques.
Some authors construct abstract measures of risk attitude and relate them to personal characteristics, such as nationality.
Only the results from the model using the four-level risk attitude as the dependent variable are presented (Table 4).

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