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Risk Aversion Revisited: A Closer Look At Meaning And Measurement

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  • Weiss, Michael D.

Abstract

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.

Suggested Citation

  • Weiss, Michael D., 1986. "Risk Aversion Revisited: A Closer Look At Meaning And Measurement," 1986 Annual Meeting, July 27-30, Reno, Nevada 278074, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea86:278074
    DOI: 10.22004/ag.econ.278074
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    References listed on IDEAS

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    1. Schoemaker, Paul J H, 1982. "The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 529-563, June.
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