risk aversion

(redirected from Risk-aversion)
Also found in: Dictionary.

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 ?
The continuous variable of risk-aversion index was used in the logistic regression analysis.
It is not a time for anyone to buy the euro'' and the single European currency could further fall on risk-aversion, he said.
aging) suggests that preference for smoothing (and perhaps risk-aversion) might also arise endogenously and testable restrictions--across species, across time, or across genders--among time preference, aging, and risk-aversion could be analyzed in a simple framework.
Similarly, the yen, another barometer for risk-aversion, peaked against the dollar around 11:30 am before dropping 27.
Last week was marked by the failure of the bailout plan for the 'Big Three' US automakers to pass US Senate approval, which increased the already high levels of risk-aversion in the currency markets.
Jensen, 1991, "Total Risk-Aversion and the Pricing of Options", Applied Mathematics and Optimization, 23:51-76
The continuing series of shocks endured by the economy in 2002 created an atmosphere of risk-aversion among corporate decision makers," said Studley Chairman and CEO Mitchell Steir.
with respect to the risk-aversion index [rho] to obtain
adjustment for case mix, risk-averse physicians generated higher expenditures; a one standard deviation increase in risk-aversion was associated with a 3% increase in expenditures (95% CI, 1% - 5%).
Unfortunately for its shareholders, LTCM chose this exposure just as financial market uncertainty and investor risk-aversion began to rise rapidly around the world.
With these types of changes, the distressing tendency toward risk-aversion that is occurring in the management of long-term care facilities nationwide could be reversed.
However up until now, cost and risk-aversion have been major technology investment deterrents.

Full browser ?