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 ?
It is already unanimously accepted that investors' risk attitude is a key predictor of their level of comfort with different investment strategies and perhaps their level of worry-freeness if unfavorable investments result.
(38) Many argue that because of this failure, the orthodoxy does not capture the phenomenology of risk attitudes. (39) "Unorthodox views" in choice theory focus on this issue, and argue that risk aversion should be considered separately.
To rule out such effects, Table 2 shows separate regressions of risk attitudes on age and other characteristics for the household head and spouse separately.
Disaster Risk Reduction Factors effecting farmers' risk attitude and risk perceptions: The case of Khyber Pakhtunkhwa, Pakistan.
The key hypothesis, however, was that the differing patterns of investment might accompany differences in risk attitude. There are two aspects to this.
This is very convenient, as closed valuation formulas for both types of options exist and hence risk attitude in various situations may be assessed.
Step 3: Modeling the Analyst's Risk Attitude. When evaluating and ranking different competitor's/threat's actions, the intelligence analyst could express different risk attitudes (from absolutely optimistic to absolutely pessimistic), depending on the context, on the significance of the action, and on its consequences.
The research of simultaneously considering risk attitude newsvendor model and the bank financing service has drawn little attention.
Among others, the authors propose to build perceptual maps describing people on both aspiration and risk attitude axis and to design communication tools according to psychological research on message framing and biases.
These are labor market characteristics (year and region), personal characteristics (gender, age, parental education levels, and risk attitude), and human capital variables such as education levels and grades.
Likelihood and impact are rarely equivalent; how much relative importance a company places on each stems from the organization's overall risk attitude.
Some scholars have examined the effect of risk attitude on internal migrants who move across regions within one country.

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