A Simple Metric for Gauging Risk Aversion
The underlying rationale for insurance purchases and other forms of risk management is aversion to risk, yet the measurement of risk aversion has been inappropriately focused on risks of little or no consequence. The present paper demonstrates that a quantitative measure of large-scale risk aversion can be constructed with elementary mathematics, facilitating the solution of numerical problems. We illustrate its use with hypothetical examples and empirical survey data.
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Volume (Year): 4 (2010)
Issue (Month): 2 (July)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vital Anderhub & Werner Güth & Uri Gneezy & Doron Sonsino, 2001.
"On the Interaction of Risk and Time Preferences: An Experimental Study,"
German Economic Review,
Verein für Socialpolitik, vol. 2(3), pages 239-253, 08.
- Anderhub, Vital & Gneezy, Uri & Güth, Werner & Sonsino, Doron, 1999. "On the interaction of risk and time preferences: An experimental study," SFB 373 Discussion Papers 1999,65, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Eisenhauer, Joseph G., 2006. "Risk aversion and prudence in the large," Research in Economics, Elsevier, vol. 60(4), pages 179-187, December.
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