File:Risk aversion curve.jpg
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| Description | This figure illustrates a risk averse individual whose utility function with respect to money is concave (i.e., their utility increases as more money is received but at a diminishing rate). Suppose the individual has a choice between two alternatives: (A) a guaranteed $30; (B) a 50:50 chance of receiving $10 or $50. While the expected value of both outcomes is the same ($30), the risk averse individual gets higher utility from the certain outcome as they dislike, or are averse to, risk. The guaranteed outcome which gives the same utility as the risky outcome, or the certainty equivalent (C), is less than the expected value of the risky outcome, in this case a guaranteed $20 has the same utility as a risky outcome with an expected value of $30. |
| Date | |
| Source | Risk aversion |
| Author | Global Water Forum |
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This file is licensed under the Creative Commons Attribution 2.0 Generic license.
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- to share – to copy, distribute and transmit the work
- to remix – to adapt the work
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- attribution – You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
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This image was originally posted to Flickr by Global Water Forum at https://flickr.com/photos/82536057@N04/7746287116. It was reviewed on 1 July 2017 by FlickreviewR and was confirmed to be licensed under the terms of the cc-by-2.0. |
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| Date/Time | Thumbnail | Dimensions | User | Comment | |
|---|---|---|---|---|---|
| current | 10:16, 1 July 2017 | | 719 × 487 (56 KB) | Waldyrious (talk | contribs) | Transferred from Flickr via Flickr2Commons |
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