RISK AVERSION REVISITED: A CLOSER LOOK AT MEANING AND MEASUREMENT

Weiss, Michael D.

doi:10.22004/ag.econ.278074

RISK AVERSION REVISITED: A CLOSER LOOK AT MEANING AND MEASUREMENT

Contrary to popular belief, risk aversion is not always equivalent to concavity of the "utility of income" function. When this equivalence fails, Arrow-Pratt coefficients are not a meaningful measure of risk aversion. The pivotal issue is whether farmers' choices under risk are entirely determined by their choices under certainty.

Subject(s):

Agricultural and Food Policy
Farm Management
Risk and Uncertainty

Issue Date:

1986-07

Publication Type:

Conference Paper/ Presentation

DOI and Other Identifiers:

10.22004/ag.econ.278074

Record Identifier:

https://ageconsearch.umn.edu/record/278074

Language:

English