Download Insurance Risk Aversion Graph Background. A thousand apologies for the terrible audio. Model of demand for insurance:
Risk aversion | This figure illustrates a risk averse ... from c1.staticflickr.com What do risk averse people experience? • if an individual is risk averse then his utility function, u(x), is concave. Explaining a behavior that does not necessarily conform to standard economic models of choice and decision‐making is a fundamental issue in insurance.21 asymmetric information, adverse selection.
Risk averse investors will not want to take fair gambles (where the expected payoff is zero).
This concept is called risk aversion. How do we measure the risk aversion of an investor? Relative risk aversion in excess of two, assuming that investors were informed, rational, etc. A thousand apologies for the terrible audio.
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