Question

In: Operations Management

In your opinion, to what extent do you think it is possible to transform a risk-averse...

In your opinion, to what extent do you think it is possible to transform a risk-averse person into the risk-seeking person? What ideas can you come up with for training risk-seeking people to become more risk-neutral? A one or two paragraph answer is sufficient.

Solutions

Expert Solution

Risk-averse is a person who seeks for the deals regarding the guarantee payments which involve no risk whereas risk-seeking person also loves to take risks for some better opportunities. There is no guarantee of win or lose for themselves. To some extent, it is possible to turn a risk-aversion person into a risk-seeking person by providing deals which involves little risks. Once the person starts winning the deals of little risks. He will tend to involve in more risk-seeking deals.

Risk neutral person is the person who makes his decision mathematically. They have traits of both risk-aversion and risk-seeking person. For low risk deals, they person taking risks and for high risk deal they prefer the guarantee payments. We can train risk seeking person to become more risk neutral by teaching his to take his all decisions mathematically to what extent he can have the profit of the deal. Instead of just falling for risky deals, do calculations and know probability of winning.

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