The term mixed risk aversion, introduced by Caballe and Pomansky (1995), applies to an individual who dislikes an increase in risk of any degree, while the term mixed risk lover
, introduced by Crainich, Eeckhoudt, and Trannoy (2013), describes an individual who dislikes increased risk for odd orders but likes increased risk in even orders.
Explanatory CRRA Takes two values: (i) 1, if the individual is risk lover
; and (ii) 0, other way.
TABLE 4 Distribution of Risk Attitudes Number Holt and Our Experiment of Safe Holt and Laury Laury Benchmark Choice Choices Classification Experiment Treatment Treatment 0-1 Highly risk lover
0.01 0.05 0.00 2 Very risk lover
0.01 0.00 0.02 3 Risk lover
0.06 0.05 0.10 4 Risk neutral 0.26 0.18 0.22 5 Slightly risk-averse 0.26 0.18 0.15 6 Risk-averse 0.23 0.32 0.30 7 Very risk-averse 0.13 0.17 0.17 8 Highly risk-averse 0.03 0.03 0.03 9-10 Stay in bed 0.01 0.02 0.02 Note: The number of safe choices corresponds to the number of the decisions with the "safe" Option A and thus corresponds to the "risk aversion" variable in our econometric analysis.
A risk lover
would opt for a higher return with a lower probability of occurring, point B in Figure 2-8.
On the other hand, if the individuals' risk index is near zero then this individual is considered a risk lover
since relatively few precautions are taken.
It also excludes the entire behavioral approach to finance and the role of risk lovers
. We think the fundamental bedrock on which all asset pricing models lie should be re-examined.
They act as intellectuals and behave as risk lovers
. They fail to predict the rare event which certainly happens sooner or later.
The F/L bias could also originate from bettors' loss-aversion, a behavioral attitude that can make bettors act as risk lovers
in order to close their betting day without losses.
25 July 2011 - JP Morgan considers that Swedish drug developer Active Biotech AB (STO: ACTI) offers an attractive risk/reward ratio to risk lovers
ahead of the results from a second Phase III study of multiple sclerosis (MS) drug candidate laquinimod.
"If they think the situation will stabilize, they won't run; but if they think it will not stabilize anytime soon, they will run fast," he added, "risk lovers
will stay in Egypt and risk neutrals will analyze the situation and those who are afraid of risks will take their money elsewhere."
(24.) If adult bicycle riders are risk lovers
, our estimates of VSL for adults might be too low.
They conclude that for risk averters and risk lovers
, prudence guarantees precautionary saving.