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A Simple Metric for Gauging Risk Aversion
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Joseph G. Eisenhauer
Published/Copyright:
July 14, 2010
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.
Published Online: 2010-7-14
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Articles in the same Issue
- Featured Article
- A Reexamination of the Relationship between Organizational Forms and Distribution Channels in the U.S. Property Liability Insurance Industry
- An Equilibrium Analysis of the Insurance Market with Horizontal Differentiation
- On Modeling Diversification Benefits in Insurance Portfolios--An Australian Perspective
- Asymptotic Tail Probability of Randomly Weighted Sum of Dependent Heavy-Tailed Random Variables
- Survival Mixture Model for Credit Risk Analysis
- A Simple Metric for Gauging Risk Aversion
