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Risk aversion in the small and in the large

In: HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I

Author

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  • John W. Pratt

Abstract

This paper concerns utility functions for money. A measure of risk aversion in the small, the risk premium or insurance premium for an arbitrary risk, and a natural concept of decreasing risk aversion are discussed and related to one another. Risks are also considered as a proportion of total assets.

Suggested Citation

  • John W. Pratt, 2013. "Risk aversion in the small and in the large," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 19, pages 317-331, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814417358_0019
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    Citations

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    Cited by:

    1. Jean-Louis Arcand & Linguère M'Baye, 2013. "Braving the waves: the role of time and risk preferences in illegal migration from Senegal," CERDI Working papers halshs-00855937, HAL.
    2. Lucía Gorjón & Sara de la Rica & Antonio Villar, 2018. "The social cost of unemployment: the Spanish labour market from a social welfare approach," Working Papers 18.11, Universidad Pablo de Olavide, Department of Economics.
    3. Jean-Louis Arcand & Linguère M'Baye, 2011. "Braving the waves: The economics of clandestine migration from Africa," CERDI Working papers halshs-00575606, HAL.
    4. Lucía Gorjón & Sara de la Rica & Antonio Villar, 2019. "The social cost of unemployment in Spain: who are the losers?," Studies on the Spanish Economy eee2019-12, FEDEA.
    5. Cheng-Few Lee & Chengru Hu & Maggie Foley, 2021. "Differential risk effect of inside debt, CEO compensation diversification, and firm investment," Review of Quantitative Finance and Accounting, Springer, vol. 56(2), pages 505-543, February.
    6. Lucía Gorjón & Sara Rica & Antonio Villar, 2020. "The Cost of Unemployment from a Social Welfare Approach: The Case of Spain and Its Regions," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 150(3), pages 955-976, August.

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