Changes in background risk and risk taking behavior

Article Abstract:

There are multiple risks and incomplete markets that exist when economic decisions are made during uncertainty. Consequently, the choice of endogenous risks are done with the presence of exogenous 'background risks' which are not in the control of the agent. It seems natural to assume that an exogenous deterioration in background wealth will lead people to take more care in other areas. Background wealth deteriorations in the forms of general first- and second-degree stochastic dominance changes in risk are analyzed.

Economic aspects, Wealth, Risk-taking (Psychology), Risk taking

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Increasing risk, decreasing absolute risk aversion and diversification

Article Abstract:

The definition of riskiness is presented under a situation characterized by risk averse investors whose utility function shows a decreasing aversion trend. The condition that is obtained when a certain variable is considered riskier than another is corollarily described using the cumulative distribution of the variables as factors. Mean preserving spread functions are also used in the analysis.

Research

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Risk aversion in RDEU

Article Abstract:

A study on risk aversion in rank-dependent expected utility theory is presented.

Management dynamics, New Zealand, Management, Company business management, Risk aversion

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