Risk Aversion and Individual Preferences Modelling

Constantin Anghelache, Madalina Gabriela Anghel and Aurelian Diaconu
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Constantin Anghelache: Bucharest University of Economic Studies, “Artifex” University Bucharest
Madalina Gabriela Anghel: Artifex University Bucharest
Aurelian Diaconu: Artifex University Bucharest

Romanian Statistical Review Supplement, 2016, vol. 64, issue 1, 77-82

Abstract: Confronting risky situations is a feature of any decision making, in general, but, especially for specialized decision making contexts. Risk aversion concentrates the problems of modeling individual preferences. Models can grasp with accuracy and largely enough the fundamental human tendencies. As consequence, understanding economic behavior confronted to risk might be understood. Modeling market forecasting activities is possible based on “marginal consumer”. Thus, the vague use of mathematical instruments is necessary, but not enough as condition to develop an economic analysis. A historical approach of risk analysis might bring an idea regarding the development of the concept instruments used today when analyzing “risky choices”

Keywords: risk theory; diversification; risk aversion; risk premium; absolute risk aversion; relative risk aversion; utility function; marginal consumer; marginal utility; DARA; CARA; CRRA (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:rsr:supplm:v:64:y:2016:i:1:p:77-82

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