Risk Avoidance and Risk Taking under Uncertainty: A Graphical Analysis

Yang-Ming Chang

The American Economist, 2008, vol. 52, issue 1, 73-85

Abstract: Using a graphical approach, we characterize explicitly variations in optimizing behavior from risk avoidance (e.g., insurance buying) to risk taking (e.g., “gambling†) in terms of risk preferences, market insurance terms, and exogenous changes in endowed incomes. An individual who is a “risk avoider†at one income position may become a “risk taker†at another income position. Moreover, both low- and high-income risk-averse individuals may engage in risk-taking activities at the same time. These results imply that predictions about attitude towards risk cannot be made independently of income positions or economic opportunities.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/056943450805200107 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:amerec:v:52:y:2008:i:1:p:73-85

DOI: 10.1177/056943450805200107

Access Statistics for this article

More articles in The American Economist from Sage Publications
Bibliographic data for series maintained by SAGE Publications ().