Question

In: Economics

What do the following acronyms mean: DARA, CARA, and IARA and WHY are they important?

What do the following acronyms mean: DARA, CARA, and IARA and WHY are they important?

Solutions

Expert Solution

DARA = decreasing absolute risk aversion

CARA = constant absolute risk aversion

IARA = Increasing absolute risk aversion

The importance of these risk aversions is for effective altruism since jt gives you the result as to how rational as well as altruistic people will take decisions.


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